Matters finance is usually intertwined in a whole lot of setbacks and problems. Imagine you lending out money to a close affiliate to help them offset a certain bank loan that is long overdue. It then happens that their income cannot support the repayment process. All goes haywire, but then fault cannot be pinned on the borrower but you.
We can’t handle it
Dollar Financial Group found themselves in the same situation whereby they were asked through set regulations to be able to step up and compensate their customers. This is because the overseer agency claimed that they were loaning out to their borrowers more than what their financial statuses could accommodate, thus they were finding it almost impossible to repay. The group is among the top payday lender companies in the financial food chain, according to British rankings. The refunds they were ordered to pay were estimated at a hefty amount of about £1.45m to their numerous customers.
After thorough investigations launched in July 2014 into the activities of the money lending scheme, certified financial regulator, Financial Conduct Authority, found that whatever they were lending out to their 147,000 customers was overwhelming, all factors considered. It was also unraveled that their interest rates were quite high, evidence proving that they were extorting returns from their customers and ended up being the greatest benefactors as opposed to their customers. They provided a misguided mentality by manipulating the desperation of their customers in their quest to seek financial help. The Money Shop, Payday UK, Payday Express and Ladder Loans; brands run and managed by Payday UK had a dominant interest rate of approximately 2.92% which was undoubtedly on the high.
Unfair financial balance
Upon discovery on how the loans burdened the consequent borrowers, Financial Conduct Authority ordered a mega slash on the balance that the customers at the time owed the company, or a make complete cash refunds to their customers since most of them were unable to repay the loans issued. In order to avoid future losses of the sort, the regulator went ahead to suggest a total barring on the issuing of loans to persons who would find repayment a burden of sorts.
Upon the wakeup call on Dollar, they decided to formulate a program to ensure that all the customers they were dealing with at the time were compensated. 65,000 were to receive full cash returns, 67,000 experienced a deduction on the balance that they owed the organization and the remaining 15,000 customers would enjoy a joint package of the two; cash refunds and reduced balances.
After a skilled person was sent to counter check what was happening on the groundand a fault in the moneylending scheme discovered, Dollar saw it modest to make a few adjustments regarding their lending process. This was in order to adhere to the terms set up by FCA.Most of their brands have also cut down on their interest rates and to top it, a personal apology to the customers was issued by Stuart Howard, Dollar Financial UK chief executive.