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PAYDAY LENDER FACING £10M COMPENSATION BILL AS MORE THAN 92,000 CUSTOMERS COULD BE DUE COMPENSATION PLUS A POTENTIAL WRITE OFF OF £10.3M

Published on:July 27, 2015Author:The Debt Advisor

Payday loan lender Cash Genie who are owned by Ariste Holding were found by the FCA to have imposed a number of unfair fees and interest levies since they entered the market in 2009. These included charging customers £50.00 to transfer them to the firm’s debt collection business.

The regulator found that the company had serious failings including:

  • Unfair fees, such as the transfer charge when customers were passed to its sister debt collection firm – Twyford Developments, trading as Carter Forbes – when they defaulted. This fee was charged even though the company incurred no additional costs.
  • Payday loans were rolled over into another term, despite no request or consent from the customer. It failed to assess whether this was appropriate for the customers involved.
  • Fees and charges were levied which were unfair such as fees to transfer accounts to collection.
  • Bank details for the company’s other brands – txtmecash.co.uk and paydayiseveryday.co.uk – were used to take payment for existing Cash Genie loans. Customers were falsely told loans with these other brands were pre-approved.
  • It failed to send annual statements to customers who had not repaid in 12 months, and who should not have faced any further fees or interest.

If you are Cash Genie customer and you are found to be owed compensation then you will be contacted by Cash Genie by 19th September 2015.

Bev Budsworth Managing Director of The Debt advisor commented,

“So far this is the toughest compensation settlement to customers that a short term lender has been forced to pay by the FCA. Wonga was forced in June 2014 to pay £2.6M in compensation to customers overcharged or sent threatening letters from fake law firms, the following month, another payday lender, The Money Shop, agreed to repay £700,000 to customers it had given short-term loans to against its own lending policy. It is clear that the regulation by The Financial Conduct Authority means that customers must be treated fairly”. Bev also added, “The Debt Advisor Ltd have seen a marked improvement in how short term lenders treat their customers who get into difficulty. However, there is still room for improvement as some of the lenders do not have adequate resources to ensure that communications with debt solution providers are dealt with in a reasonable timescale”.

Below are details from Cash Genie’s website on how redress will be calculated.

How Will Redress Be Calculated?

Our approach to calculating redress and its application has been independently verified. The basis for each of the four issues is as follows:

1. Unfair or unauthorised charges

Cash Genie has agreed to write-off or refund fees and charges which should not have been added to customer accounts:

i. Any excess charges applied over:

  • one late payment fee of £15
  • four letter fees at £12 per letter
  • one trace fee at £45

ii. Any interest in excess of 30% of the outstanding balance charged per month

iii. The £50 fee for transferring a customer’s account to Twyford Developments Ltd, trading as Carter Forbes, our sister debt collection firm

iv. The £30 fee charged when a customer applied for a chargeback through their bank where they believed that Cash Genie had taken an unauthorised payment from their account

v. All charges on customer accounts which cannot be specifically identified and justified.

2. Rollovers

For loan agreements dated from 1 January 2013 to 30 June 2014, the firm will write-off or refund any interest charged over the initial [first month’s interest payment] interest plus a further three months’ interest, whether this was added as rollover interest or as part of a paydown or a repayment plan.

3.       Misuse of customer bank details 

Cash Genie will refund to customers amounts taken without authorisation and will write-off all outstanding balances on accounts affected by this practice.

4.       Failure to provide annual statements 

Cash Genie will write off or refund interest and charges added to customers’ accounts after the point at which we should have provided customers with an annual statement.