Following a review by the Financial Conduct Authority (FCA), payday lender Dollar, trading as The Money Shop, has voluntarily agreed to refund over £700,000 of interest and default charges to 6,247 customers who, due to a systems error, received a loan amount which exceeded Dollar’s own lending criteria.
Clive Adamson, director of supervision at the FCA, said:
“The FCA expects all credit providers to carry out proper checks to ensure that borrowers don’t take on more than they can afford to pay back.
“We are pleased that Dollar is working with us to put matters right for its customers and to ensure that these practices are a thing of the past.”
The Office of Fair Trading raised concerns about Dollar’s lending decisions in February 2014 after a review of customer calls revealed some loans were being approved for amounts which Dollar’s lending criteria would not normally allow.
Dollar will contact all affected customers immediately and expects to provide refunds in cash totalling £79,000, with the remainder of customers having their outstanding balance reduced. Refunds will be paid once Dollar has confirmed customers’ up to date contact and bank details.
Separately, Dollar has committed to improving its approach to assessing affordability. It has also agreed to appoint an independent Skilled Person to review its lending decisions. The review, which will be paid for by Dollar, will cover its loan products and the entire customer journey from the initial affordability assessment to loan collection. It will also consider whether customers are being treated fairly and are now only being lent sums that they can afford to repay. The Skilled Person will also ask customers about their borrowing experiences and report these back to the FCA.
Dollar operates in the UK under the trading names of Payday UK, Payday Express, The Money Shop and Ladder Loans. Dollar is the UK’s second largest payday lender and the FCA’s most recent information suggests that it has around a 24% share of the payday market.
Customers do not need to take any action: Dollar will shortly be contacting those that have been affected.
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