On 19 September the FCA issued a press release confirming that CFO Lending had agreed to provide over £34 million in redress to approximately 97,000 payday loan customers. The redress is, for the most part, comprised of reductions to customer balances of £31.9million with the rest in cash payments. The full release can be read here1.
The FCA points out that it has worked closely with CFO since August 2014 when the lender agreed to suspend outbound collections pursuant to an agreed form of Voluntary Application for Imposition of Requirements (see s.55L FSMA 2000). After two years of likely extensive investigations and reviews, including by an independent Skilled Person appointed under s.166 FSMA 2000 (the cost of which is borne by the regulated entity), the FCA is satisfied with CFO’s progress and the way that it has addressed historic operational issues dating back to 2009.
In publicising this outcome, the FCA continues to send a very robust message to lenders: they must be committed to providing consumers with services that meet stringent FCA standards and cater for payday customers who can be the most financially vulnerable of borrowers. Businesses who have been the subject of s.166 reviews will also know about the substantial costs involved, not just in terms of the Skilled Person’s fees but also of engaging third party consultants and the significant imposition on management time. Customer redress is only one part of the picture.