In a recent nod to the troubles bedeviling the payday industry across Europe and especially within the United Kingdom, CashEuroNet UK is repaying $2.6 million through total loan forgiveness for more than 3,900 customers, Bloomberg reported Wednesday (Nov. 4).
[bctt tweet="CashEuroNet UK is repaying $2.6 million through total loan forgiveness for more than 3,900 customers."]
The newswire stated that the firm, which owns and operates the Quick Quid brand, among others, will also have to change its lending practices, as ordered by the U.K.’s regulatory body, known officially as the Financial Conduct Authority.
Bloomberg reported that the entire payday loan sector, and short-term loans in general, has been under scrutiny from regulators over annual interest rates that can reach as high as four digits. The 3,490 customers referenced above borrowed more through loans than they were able to repay.
In other examples of alleged egregious lending to payday borrowers and penalties tied to that lending, Bloomberg recounted that Cash Genie, a payday lending firm, agreed to give its aggrieved customers £20 million after agreements reached with regulators. That payout covered more than 92,000 customers and encompassed both balance write-downs and refunds.
And there was also the case of Wonga Group, which was fined £2.6 million, also by the FCA, last year in a scheme that threatened customers with legal action via letters issued by non-existent law firms. That firm announced earlier this year that it would shed roughly a third of its workers. And as part of industry-wide rules that dictate that interest charged and attendant fees could not exceed the amounts borrowed, Wonga reported a loss of £37 million pounds on a pre-tax basis, and it does not expect to be in the black for this year (i.e., 2015) either.
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