Payday loan company QuickQuid has agreed to refund thousand of customers who took out loans they could not afford.
Customers of QuickQuid and Pounds to Pocket will be contacted by each organisation automatically. They will receive, on average, refunds of over £400.00 each.
The parent company CashEuroNet will pay out a total of 1.7 million, according to reports.
This follows news a few weeks ago from Dollar Financial, the owner of The Money Shop, who agreed to pay £15 million to 147,000 customers for a similar reason.
The FCA are continuing to monitor payday lending companies to ensure they carry out appropriate affordability checks; paying particular attention to the fair treatment of those who have trouble meeting their loan repayments. The companies now say they have made changes to their lending criteria.
It has been a difficult time for payday loans companies. Last year Wonga made a pre-tax loss of 37 million amid a major overhaul of the controversial company. Previously it had apologised and agreed to pay compensation to customers after using letters from fake legal firms when chasing debts. This left it with a compensation bill of £2.6 million to be paid to 45,000 customers, not all of whom have yet been located.
It has also written off thousands of unsuitable loans. Debts worth more then £200 million from more than 300,000 customers were cancelled, owing to a failure to assess properly whether these borrowers could repay.
Wonga, along with other Payday lenders, are now facing stricter rules from the regulator the Financial Conduct Authority (FCA). The regulator has said it now expects a large number of payday loan operators to exit the market as a result.
There have been changes to the criteria for lending. Lenders are no longer allowed to roll over a loan more than twice, nor attempt to reclaim payment from a borrowers account more than twice. There is also a cap on the total cost of lending in the UK.
I think greater scrutiny of payday lenders is long overdue. It is my opinion that once debtors have reached the stage of turning to payday lenders, it is often not further lending that is required but a structural review of their financial and often insolvent position. If this is carried out by a reputable debt advisor then the outcome may mean the debtor’s finances are restructured to enable them to meet their credit payments. Often the best option at this stage is a formal insolvency procedure such as an Individual Voluntary Arrangement (IVA) or even a Debtors Bankruptcy Petition to clear all their debts.
Our specialist Personal Insolvency lawyers have a wealth of experience advising those struggling with debts and finances. Our bankruptcy solicitors can provide tailored solutions based on your personal circumstances. Contact a member of our dedicated team on 0333 331 4043. Alternatively please contact us online.