A payday lender has agreed to carry out a past business review and suspend all outbound debt collection activities after the FCA raised serious concerns about its systems and practices.
In a voluntary agreement between the regulator and CFO Lending published last week, the FCA said it was concerned the lender has misused banking information provided by customers to repay outstanding debts.
CFO Lending has to carry out a skilled persons report, also known as a section 166 report, which the regulator uses to check for weaknesses in a firm’s systems. It will also have to set up a consumer redress scheme. The FCA says there have been systems errors relating to the automatic calculation of customers’ balances, leading to customers’ outstanding loan balances being incorrect.
The regulator also has concerns that CFO’s communications to customers, its debt collection training materials and staff incentive schemes are not compliant with its rules.
It says it is concerned these practices prioritise the collection of money over fair treatment of its customers, particularly those who are vulnerable.
The FCA took over the regulation of the consumer credit market from the Office of Fair Trading on 1 April. CFO ceased to provide payday loans from 19 May, but continues to collect outstanding debts.