Ariste Holding Limited, trading as Cash Genie, has entered into an agreement with the Financial Conduct Authority (FCA) to provide over £20 million of redress to more than 92,000 customers for unfair practices.
In June 2014, Cash Genie voluntarily notified the FCA that it had engaged in unfair practices. In July 2014, the firm agreed to an independent review of its past business and to carry out a redress scheme. As a result of the review, it has agreed to provide £10 million in redress. The firm had already voluntarily written off £10.3m of fees and interest.
A number of serious failings took place which caused detriment for many customers. Failings date back to the launch of Cash Genie in September 2009:
- Cash Genie charged fees and interest which were unfair. For example, it charged £50 to transfer customers to its sister debt collection firm, Twyford Developments Ltd, trading as Carter Forbes, even though it incurred no additional costs. In other cases, the firm charged fees which it was not entitled to under its customer contracts;
- loans were rolled over or refinanced without customers’ explicit request or consent and without undertaking appropriate checks or assessments of customers’ situations;
- Ariste Holding Limited also traded under the brands www.txtmecash.co.uk[1] and www.paydayiseveryday.co.uk[2]. Banking information which customers had provided to these websites when they applied for a loan was used to take payment for existing Cash Genie loans without customers’ informed consent. In a significant number of these cases customers were encouraged to apply to these websites for loans and give their banking details under the false pretence that the loan had been pre-approved; and
- Cash Genie failed to send annual statements to customers who had not repaid their loans after 12 months. This means that it should not subsequently have applied further fees or interest to accounts.
Linda Woodall, Acting Director of Supervision – Retail and Authorisations at the FCA said:
“We have been encouraged that Cash Genie has been working with us proactively and openly to put things right for its customers after these issues were reported.
Although standards in the consumer credit sector are improving, it is disappointing that examples of poor practice in the payday market keep surfacing. We expect all firms to notify us of any unacceptable past or current practices and provide appropriate redress to anyone affected.”
The redress package agreed with the FCA will consist of a combination of cash refunds and balance write-downs. Cash Genie has agreed to:
- write off or refund fees and charges which should not have been added to customer accounts;
- write off or refund rollover interest where the firm rolled over customers’ loans inappropriately;
- refund payments taken without authorisation. In addition, the firm has agreed to write off all outstanding balances on accounts affected by this practice; and
- write off or refund interest and fees added to customers’ accounts after the point at which the firm should have provided customers with an annual statement.
Customers do not need to take any action. Cash Genie aims to contact all affected customers by 18 September 2015. There is further information for customers who think they may have been affected on the FCA and Cash Genie websites.
Notes to editors
- Following discussions with the FCA, in July 2014 Cash Genie formalised its commitment to investigate past practices and pay redress to consumers under a voluntary requirement. The redress scheme has been overseen by a Skilled Person.
- View a copy of the Voluntary Requirement[3].
- The redress scheme also applies to some customers who applied for loans through Ariste Holding Limited’s other websites www.txtmecash.co.uk[1] and www.paydayiseveryday.co.uk[2]
- Customers who think they may have been affected can find more information in our news section[4].
- Cash Genie stopped offering new loans to customers in September 2014. Its parent firm, US-based EZCORP, announced on 6 October 2014 that Cash Genie would exit the UK payday lending market in 2015 as part of its new business strategy.
- Cash refunds and balance write-downs have been agreed with Cash Genie in the particular circumstances of this case and will consist of the following:
- Unfair or unauthorised charges:
- charges applied in excess of: one late payment fee of £15, four letter fees of £12, and one £45 trace fee,
- interest charged at a higher rate than what was stated in customer contracts, which was equal to 30% of the outstanding balance per month,
- £50 fee for transferring a customer’s account to Twyford Developments Ltd, trading as Carter Forbes, Cash Genie’s sister debt collection firm,
- £30 fee charged where a customer applied for a chargeback through their bank where they believed that Cash Genie had taken an unauthorised payment from their account,
- all charges on customer accounts which cannot be specifically identified and justified.
- Rollovers and refinancing: for loans granted from 1 January 2013 to 30 June 2014, the firm will write off or refund any interest charged over the initial interest plus a further three months’ interest (reflecting the prevailing industry standard at the time that firms should apply a maximum of three rollovers).
- Misuse of banking information: the firm will refund to customers amounts taken without authorisation and will write off all outstanding balances on accounts affected by this practice.
- Annual statements: the firm will write off or refund interest and charges added to customers’ accounts after the point at which it should have provided customers with an annual statement.
- Unfair or unauthorised charges:
- From July 2014 new FCA rules came into force limiting the number of rollovers per loan to two.
- The redress due relates to a period before the price cap for high-cost short-term credit was introduced on 1 January 2015.
- In relation to unauthorised charges, rollovers and annual statements, where a customer has an outstanding debt to Cash Genie, redress will be provided in the first instance as an equivalent write-down of that outstanding balance. Where the customer owes Cash Genie less than the value of the redress owed to him/her, the outstanding debt will be written off and the difference will be paid to the customer in the form of a cash refund. Where the customer has already paid off his/her debt in full, redress will be wholly in the form of a cash refund. However, for customers affected by the misuse of banking information, the whole outstanding balance will be written off in every case and amounts taken by this means will be refunded as cash payments.
- For all closed accounts affected by the unfair fees, rollovers and annual statements issues, an adjustment of simple interest based on the CPI measure of inflation will be added to redress due.
- On 1 April 2014, the FCA took over responsibility for consumer credit and the regulation of 50,000 consumer credit firms, including logbook lenders, payday lenders and debt management firms.
- On 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.