Paul Boyle and David Clements of Harrisons Business Recovery and Insolvency Ltd have been appointed joint administrators of CFO Lending Ltd, a payday lender which has hit cashflow difficulties after it was required to provide over £34m of redress to more than 97,000 customers for unfair practices following an investigation by the Financial Conduct Authority (FCA)
The FCA said that the firm has so far provided over £32m of redress to customers by writing down or reducing existing loans. However, over £2m of cash payments to former customers have not yet been made.
The administrators have said that approximately 26,400 clients and former clients are owed varying sums from the company which, including interest, totals approximately £3.6m.
CFO Lending also traded as Payday First, Flexible First, Money Resolve, Paycfo, Payday Advance and Payday Credit. Most of the firm’s customers had high-cost short-term credit loans (payday loans) but some customers had guarantor loans and some had both.
The FCA began investigating the firm in 2014 when it identified a number of serious failings dating back to the launch of CFO Lending in April 2009.
These included the firm’s systems not showing the correct loan balances for customers, so that some customers ended up repaying more money than they owed; misusing customers’ banking information to take payments without permission; making excessive use of continuous payment authorities (CPAs) to collect outstanding balances from customers; failing to treat customers in financial difficulties with due forbearance, including refusing reasonable repayment plans suggested by customers and their advisers; sending threatening and misleading letters, texts and emails to customers; routinely reporting inaccurate information about customers to credit reference agencies; and failing to assess the affordability of guarantor loans for customer.
In August 2014 the firm agreed to stop contacting customers with outstanding debts while it carried out an independent review of its past business. It also agreed to carry out a redress scheme.
In February 2016 the FCA, satisfied with the results of the independent review, authorised the firm with limited permission to collect its existing debts but not to make any new loans. It also agreed a £34m redress package consisting of a combination of cash refunds and balance write-downs.
Following the administration, the FCA said it has been working with the administrator for CFO to ensure the fair treatment of and continuity of service to CFO Lending customers.
Customers who are owed a cash payment by CFO, either under the redress scheme or following an upheld complaint, are advised to wait for the administrator to contact them. The regulator said the administrators will contact customers in the very near future to provide an update on the process and details on who to contact with queries.
In a statement, Harrisons said: ‘Our role as joint administrators is two-fold. The first objective is to protect the interests of creditors generally, including consumer creditors. Second, we wish to maximise realisations from the assets of the company, which may assist towards achieving the first objective. We can confirm that we are working closely with the FCA to achieve both of these objectives and will to do so.’
