Owner of The Money Shop ordered to pay £15m in borrower refunds

Banking and Borrowing

Updated on 26 October 2015 | 2 Comments

Dollar Financial, which owns payday lenders like The Money Shop and Payday UK, will hand back more than £15m in refunds to borrowers.

The owner of payday lenders The Money Shop, Payday UK and Payday Express has been ordered to refund £15.4 million to around 147,000 borrowers.

The Financial Conduct Authority said that the borrowers may have been hurt by the substandard affordability checks, debt collection practices and systems errors of Dollar Financial UK.

A review of lending practices by Dollar’s firms revealed that many borrowers were lent more than they could afford to repay.

The exact amount that borrowers will get depends on their case. 65,000 customers will get a cash refund, 67,000 will have their current loan balance reduced and 15,000 will get both a cash refund and a reduction in their loan balance.

Last year Dollar agreed to review its lending practices and refund customers £700,000.

Jonathan Davidson, director of supervision – retail and authorisations 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 encouraged that Dollar is committed to putting things right for its customers.”

This redress package follows Wonga last year having to write off loans handed to more than 300,000 borrowers, after admitting they never should have been approved.

What happens now?

The redress programme relates to loans taken out between 1st April 2014 and 30th April 2015 in respect to the affordability issues, and between 1st January 2013 and 30th April 2015 in relation to collection issues.

Dollar will begin contacting borrowers now, and plans to complete the compensation programme by early 2016.

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