Payday lenders must offer compensation for mis-sold credit, says FCA
Lenders should inform the regulator to immediately if they may be unable to meet their financial commitments due to the cost of reimbursing customers.
Your support helps us to tell the story
As your White House correspondent, I ask the tough questions and seek the answers that matter.
Your support enables me to be in the room, pressing for transparency and accountability. Without your contributions, we wouldn't have the resources to challenge those in power.
Your donation makes it possible for us to keep doing this important work, keeping you informed every step of the way to the November election
Andrew Feinberg
White House Correspondent
Payday lenders should offer compensation to customers who may have been mis-sold expensive loans, even if it threatens the company with bankruptcy, the City watchdog has said.
The Financial Conduct Authority said payday lenders should contact customers about potential compensation if creditworthiness assessments were not compliant.
Lenders should inform the regulator to immediately if they may be unable to meet their financial commitments due to the cost of reimbursing customers.
The warning comes after the collapse of Wonga in August. The lender had been one of the most well-known providers of high-cost credit but a crackdown by the FCA and a large rise in complaints made it unprofitable.
The lender said its struggles were due to a “significant” industrywide increase in people making claims in relation to historic loans.
It blamed claims management companies for the rise, but said it was making progress against a transformation plan set out for the business.
It also follows the failure of payday lender Wonga in August, which collapsed following a jump in customer compensation claims after a crackdown on the sector in Britain.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments