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Money Shop owner to pay £15m in customer refunds Money Shop owner to pay £15m in customer refunds
(35 minutes later)
One of the UK's major payday lenders has agreed with the Financial Conduct Authority (FCA) to refund £15.4m to 147,000 customers. One of the UK's major payday lenders will refund £15.4m to 147,000 customers - many of whom were given loans they could not afford to repay.
The firm, Dollar Financial UK, owns brands including The Money Shop, Payday UK, Payday Express and Ladder Loans. Dollar Financial UK, which owns brands including The Money Shop, Payday UK, Payday Express and Ladder Loans, agreed the compensation after a review by the Financial Conduct Authority (FCA).
The FCA says customers may have suffered as a result of the firm's affordability checks, debt collection practices and system errors. The company apologised to those who "suffered difficulties".
The FCA began a review in July 2014 into Dollar's lending decisions. It is the third-biggest repayment by a payday lender in recent years.
This follows FCA-led investigations by Wonga and Cash Genie.
The FCA said Dollar Financial customers may have suffered as a result of the firm's affordability checks, debt collection practices and system errors.
Payouts
Compensation relates to the affordability of loans taken out in the year to April 2015, as well as the collection of repayments on loans taken out between January 2013 and the end of April 2015.
During this time - in July 2014 - the company agreed to review its lending practices and refund customers a total of £700,000.
Stuart Howard, chief executive of Dollar Financial since November 2014, said: "As the new CEO, I accept the findings of the review and apologise to anyone who may have suffered difficulties as a result.
"It is proper that we put things right where they have gone wrong and I have gone further than the review in reforming the way our business operates to reflect the company aim of being the most responsible lender in its marketplace."
Customers due compensation will be contacted by the company, including those who have moved address or whose bank account information has changed.
Some 65,000 will be given a cash refund, another 67,000 will have their current loan balance reduced and 15,000 will receive a combination of the two.
The compensation comes after lender Wonga said in October 2014 that it was writing off £220m of debts for 330,000 customers, and - in July - lender Cash Genie was faced with a £20m compensation bill after charging customers £50 to transfer them to the firm's debt collection business.
The move to review lenders' operations was welcomed by Guy Anker, managing editor at MoneySavingExpert.com.
"Thankfully, we have started to see much greater scrutiny of the ways these dangerous businesses in this dangerous industry operate - and now their horrible practices are starting to catch up with them," he said.