Payday lender to write off loans to customers who were lent more than they can afford to repay

November 6, 2015

Lucy_2 (Custom)

 

 

By Lucy Palmer-Richeson.

CashEuroNet, the payday lender behind Pounds to Pocket and QuickQuid, has come to an agreement with the Financial Conduct Authority (FCA) to spend £1.7m to compensate almost 4,000 customers after the regulator expressed concern about the firm’s lending practices.

The FCA has been working with CashEuroNet for over a year to review its lending decisions, and it was found that many customers are being lent more money that they could afford to repay.

CashEuroNet has now made changes to its lending criteria and has reassessed every loan made since April 2014 that was in arrears of more than 30 days.

As a result, it found that nearly 4,000 customers were able to borrow more than they could afford to repay. Of these, over 2,500 customers will have their current loan balance written off completely, nearly 1,000 will receive a cash refund for the interest paid on the part of the loan they were unable to pay back, and nearly 500 customers will get both a refund and their current debts erased.

Jonathan Davidson, director of supervision – retail and authorisations at the FCA, said: “We are pleased that CashEuroNet is working with us to address our concerns.

‘It is important that firms carry out appropriate affordability checks and pay particular attention to fair treatment of those who have trouble meeting their loan repayments.”

Nick Drew, CashEuroNet’s managing director, said: “We appreciate the opportunity to work with the FCA. We are pleased they’ve witnessed how seriously we take our regulatory responsibilities and our constant desire to achieve good outcomes for our customers.

“We apologise to the 4,000 affected customers and we are pleased to be able to address this with the announced redress plan.”

CashEuroNet announced that it will be contacting affected borrowers by email within the next two days.