In the world of payday finance, one of the largest companies widely known as Dollar Financial UK found itself in trouble, when it locked horns with the financial authorities of the United Kingdom. Dollar Financial UK is a subsidiary company of the United States Company known as Dollar Financial Group.
The company, which is the second largest lender in the United Kingdom, was ordered by the FCA to refund millions of pounds to its customers. This was after the financial regulator made the startling discovery that the company was lending its customers amounts of money far in excess of what the customers could afford to pay back.
The company was ordered to pay back in excess of fifteen million pounds to around 147,000 customers. The Financial Conduct Authority or FCA as it is commonly referred to ordered that the company refund the customers or slash the amounts of money still owed to the company. This was to keep in line with the financial regulations in the country.
High Interest Rates
The company was found to be charging interest rates as high as almost three thousand percent. Loans given to customers on a short term period were charged interest of 2,262% which is extremely exorbitant. These high interest rates which were given to unsuspecting customers placed the company clients in a very difficult position when it came to the repayment of money owed.
Statement by the company
The company gave out a statement when news regarding their regulation breaches broke out. The company stated that fifteen thousand individuals who had taken out loans with them would receive reduced balances on amounts owed to the company, as well as cash refunds of money already paid. A further sixty five thousand individuals would receive cash refunds while sixty seven thousand individuals would receive reduced balances. The company has already cut back its interest rates, keeping in line with its agreement with the FCA regarding changing its criteria when it came to lending.
A developing trend
The news that Dollar Financial UK comes in just a few months after another company was ordered to write off loans. The loans had been given to a number of Wonga customers who should never have been viable to receive the loans in the first place. The company was ordered to write off in excess of two hundred and twenty million pounds worth of bad loans that had been given out to its customers.
The issue of companies lending their customers money at very high interest rates seems to be a trend that is catching on. However, the FCA has put the companies at notice saying that there will be hell to pay if money lenders are found to be in breach of established rules that govern the manner in which lending is done. Other financial regulators in the world are also on watch, given that some of the companies involved in the practice are international companies with operations all over the world. Dollar Financial UK is the parent company to Payday UK, Ladder Loans and Payday Express.