Payday lender The Money Shop is to hand back more than £700,000 to customers after it admitted it had broken its own rules on issuing short-term loans.
The company, formally known as Dollar but trading as The Money Shop, will repay interest and default charges to 6,247 customers. Due to a systems error they were given loans which breached Dollar's own lending critieria.
The repayments are being made voluntarily by Dollar, but were announced by the
Dollar also faces a crackdown on its entire lending process after it agreed with the FCA to appoint an independent and independent "skilled person" to review its lending decisions and report back to the FCA.
The FCA said: "The review, which will be paid for by Dollar, will cover its loan products and the entire customer journey from the initial affordability assessment to loan collection. It will also consider whether customers are being treated fairly and are now only being lent sums that they can afford to repay. The skilled person will also ask customers about their borrowing experiences and report these back to the FCA."
The Money Shop, which charges interest at 2,962%, is
The high street business, with its distinctive yellow fascias, opened 56 outlets in 2013, taking the total to 562. For the year to
In April it was sold to private equity house
Dollar will contact all affected customers immediately and expects to provide refunds in cash totalling £79,000, with the remainder of customers having their outstanding balance reduced. Refunds will be paid once Dollar has confirmed customers' contact and bank details.
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