More than 92,000 payday loan customers are set to receive compensation after payday lender Cash Genie agreed to refund millions of pounds.
The payday loan company has admitted to operating unfair practices and agreed to compensate customers to the tune of £10m.
It had already written off £10m in fees and interest after it voluntarily referred itself to the Financial Conduct Authority (FCA) in June 2014.
Unfair practices included charging a higher rate of interest than stated in customer contracts on the outstanding loan balance per month.
It also charged unfair fees, such as £50 to transfer customers to a sister debt-collection firm.
There was even a £30 fee when customers applied for money back after Cash Genie had taken unauthorised payments from accounts, the FCA revealed.
If you’ve been mis-sold a short-term loan or charged hidden fees, we’ve produced a step-by-step guide you can use to complain about your payday loan company.
Unfair practices and excessive fees
Which? executive director Richard Lloyd said: ‘It’s absolutely right that payday loan customers are compensated for such poor practices. The FCA must keep the pressure up to ensure borrowers in difficulty are treated fairly and protected from falling further into debt.’
He added: ‘As well as keeping the price cap under review, the regulator should now look at unfair practices and excessive fees across the whole credit market.’
Cash Genie notified the FCA in June 2014 that it had engaged in unfair practices and subsequently agreed to an independent review of its past business to create a redress scheme.
It has now agreed to provide £10m in redress and has written off £10.3m of fees and interest.
Cash Genie compensation
Cash Genie stopped offering new loans to customers in September 2014.
US-based parent company EZCorp said in October 2014 that the firm would exit the UK payday lending market in 2015 as part of its new business strategy.
It’s one of a number of firms to leave the UK payday market, which is now under stricter regulatory rules.
The new rules include a cap on interest charges and a limit on rollovers, where loans get re-financed often after payment of a fee or at a higher repayment rate.
The firm aims to contact all affected customers directly by Friday 18 September 2015. Compensation will be paid either through cash refunds or a reduction of existing debt.
The company has published details of the redress scheme on its website.