Payday lender writes off £500,000 of loans
A payday lender has written off loans totalling around half a million pounds after it did not give customers important information, the competition watchdog has said.
The Competition and Markets Authority (CMA) found that Shelby Finance did not provide “summary of borrowing” statements to more than 15,000 customers between August 2018 and July 2019, despite being required to do so under the CMA’s Payday Lending Order.
The statements help customers to make timely and informed decisions and tell them how much interest or fees they are expected to pay on their loans and when their next payment is due.
The information can also help customers shop around for a loan that best suits their needs. The CMA said research indicates payday loans are often used by more vulnerable consumers, and so the watchdog is particularly concerned about the impact the breach may have had.
After being contacted by the CMA, Shelby Finance has written off loans of approximately £500,000 for some of the customers affected, the watchdog said.
It has also apologised, sent late summaries of borrowing by email and retrospectively made summaries of borrowing available online for customers.
Shelby Finance has also put measures in place to ensure it complies in the future.
The CMA said it will continue to monitor its progress and may take formal enforcement action if further breaches take place.
Alistair Thompson, CMA director of remedies, business and financial analysis, said: “The summaries we require payday lenders to send to customers are crucial in helping borrowers make informed decisions about their loans.
“While it is disappointing to see so many customers not being properly informed, Shelby Finance’s commitment to writing off £500,000 in loans will help put this right. We will continue to monitor the situation and will take further action if needed.”