CashEuroNet, trading as the short-term lenders Quick Quid and Pounds to Pocket, has agreed to provide £1.7m in redress to almost 4,000 customers.
The company made the agreement with the Financial Conduct Authority (FCA) after the regulator raised concerns about its lending criteria.
It follows ongoing talks between the two since the FCA took over regulation of consumer credit last year and a review of the lender’s practices.
An independent skilled person review into CashEuroNet started in September 2014, to study its lending decisions.
The review revealed that some customers were able to borrow amounts greater than they could afford to repay.
The firm has now changed its lending criteria and reassessed all loans granted since April 1 2014, and which were in arrears for 30 days or more against the new criteria.
As a result the firm identified a group of customers who were lent more than they could afford.
The 3,940 affected customers will receive redress totaling £1.7m as follows:
• 2,523 customers will have their current loan balance written off;
• 961 customers will be paid a cash refund of interest paid on the unaffordable element of the loan;
• 456 customers will receive both a cash refund and have their current loan balance written off.
Jonathan Davidson, director of supervision – retail and authorisations at the FCA, said: “We are pleased that CashEuroNet is working with us to address our concerns.
“It is important that firms carry out appropriate affordability checks and pay particular attention to fair treatment of those who have trouble meeting their loan repayments.”
CashEuroNet will start contacting customers immediately and plans to complete the redress exercise within the next 60 to 90 days.
There is also further information on the websites of Quick Quid and Pounds to Pocket.
By Marcel LeGouais