According to a report by Bloomberg, the payday lender has to give back the money to more than 97,000 customers because of practices that include failing to assess if the loans were affordable for clients.
“We discovered that CFO Lending was treating its customers unfairly, and we made sure that they immediately stopped their unfair practices,” said Jonathan Davidson, Financial Conduct Authority (FCA) director of retail and authorizations supervision, in a statement that was covered by Bloomberg. “Since then, we have worked closely with CFO Lending and are now satisfied with their progress and the way that they have addressed their previous mistakes.”
The Financial Conduct Authority launched an investigation of CFO Lending and found the company sent customers threatening and misleading letters and emails, regularly provided inaccurate information about the credit of its customers to agencies and took payments without permission.
The move against CFO Lending comes at a time when the U.K.’s FCA has gone after payday lenders and taken actions against a number of them over the course of the last few years. Some of the steps it has taken include capping the amount of interest and fees payday lenders can charge. The maximum penalty a customer can face is £15 if he or she defaults on a loan. The total fees cannot be higher than 100 percent of the amount the person borrowed.
“CFO Lending agreed with the FCA that it would provide redress to customers who were affected by past unfair practices,” the company said on its website. “As a consequence, affected customers would either have the amount they owe to CFO Lending reduced or written off.”