Payday lender Cash Genie will provide £20m in redress to more than 92,000 customers, after the regulator discovered failures in its debt collection and communication practices.
Ariste Holding, which trades as Cash Genie, reached an agreement with the Financial Conduct Authority (FCA) after a lengthy probe by the regulator.
The FCA found that Cash Genie had failed to treat customers fairly in a number of ways, including charging customers just for referring them to its sister debt collection agency.
In June 2014, Cash Genie voluntarily notified the FCA that it had engaged in unfair practices.
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 £10m in redress. The firm had already voluntarily written off £10.3m of fees and interest.
A number of serious failings took place which caused detriment for many customers. The failings date back to the launch of Cash Genie in September 2009 and were summarised by the FCA:
• Cash Genie charged fees and interest which were unfair. For example, it charged £50 to transfer customers to its sister debt collection firm, Twyford Developments, trading as Carter Forbes, even though it incurred no additional costs. In other cases, the firm charged fees it wasn’t entitled to under its customer contracts;
• Loans were rolled over or refinanced without customers’ explicit request or consent and without undertaking appropriate checks or assessments of customers’ situations;
• Ariste Holding Limited also traded under the brands www.txtmecash.co.uk and www.paydayiseveryday.co.uk. Banking information which customers had provided to these websites when they applied for a loan was used to take payment for existing Cash Genie loans without customers’ informed consent.
In many cases customers were encouraged to apply to these websites for loans and give their banking details under the false pretence that the loan had been pre-approved;
• Cash Genie failed to send annual statements to customers who had not repaid their loans after 12 months. This means that it should not subsequently have applied further fees or interest to accounts.
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.”
She added: “We expect all firms to notify us of any unacceptable past or current practices and provide appropriate redress to anyone affected.”
The redress package agreed with the FCA will consist of a combination of cash refunds and balance write downs. Cash Genie has agreed to:
• Write off or refund fees and charges which should not have been added to customer accounts;
• Write off or refund rollover interest where the firm rolled over customers’ loans inappropriately;
• Refund payments taken without authorisation;
• Write off or refund interest and fees added to customers’ accounts after the point at which the firm should have provided customers with an annual statement.
Cash Genie aims to contact all affected customers by September 18.
By Marcel LeGouais