27th July 2015
Payday lender Cash Genie is facing stumping up a massive £20m compensation bill after hitting borrowers with a £50 transfer fee to the group’s debt collection arm.
The City watchdog the Financial Conduct Authority named this as one of a number of “serious failings” which took place that “caused detriment for many customers”. The problems date back to its launch on 2009.
In June 2014, Cash Genie voluntarily notified the FCA that it had engaged in unfair practices. It stopped lending in September 2014. In July 2014, the firm agreed to an independent review of its past business and to carry out a redress scheme. As a result of the review, it has agreed to provide £10 million in redress. The firm had already voluntarily written off £10.3m of fees and interest.
The FCA in its examination of the firm found:
Linda Woodall, acting director of supervision – retail and authorisations at the FCA said: “We have been encouraged that Cash Genie has been working with us proactively and openly to put things right for its customers after these issues were reported.
“Although standards in the consumer credit sector are improving, it is disappointing that examples of poor practice in the payday market keep surfacing. We expect all firms to notify us of any unacceptable past or current practices and provide appropriate redress to anyone affected.”
Compensation will be paid either via cash refunds, or reduction of existing debt.