Cash Genie payday loans to grant £20m restitution to UK customers for dishonesty

Payday lender Cash Genie will be granting the wishes of the UK's financial regulator soon with £20m in restitution to more than 92,000 customers for its "unfair practices".

The failings of the company date back six years ago to 2009 when it first opened. After approaching the UK's Financial Conduct Authority (FCA) last summer, Cash Genie agreed to an independent review of its business practices.

In February Cash Genie announced to its customers that it would "cease any future lending" of payday loans.

"We have accepted that we did not always meet appropriate regulatory standards and that this caused detriment for many of our customers," Ariste Holding Limited, the firm behind the Cash Genie name, wrote on its website.

"We charged £50 to transfer customers to our sister debt collection firm, Twyford Developments Ltd, trading as Carter Forbes, even though we incurred no additional costs," said the firm. "In other cases, we charged fees which we were not entitled to under Cash Genie's consumer contracts".

Some customers complained online that the company took full payments out of their accounts without authorization, despite those customers making their monthly payments.

The payday lender also didn't send out annual statements to customers after 12 months showing what they owed, but against he rules applied fees and interest to customer accounts.

Paydal loans are essentially small amounts of money lent at a high rate of interest with the intention that they will be repaid quickly when the borrower receives their wages. Low-income earners with little savings are their core customers. Cash Genie would approve loans of as much as £500 with an annual interest rate of 2,986%.

Cash Genie has already written off £10.3m (€14.4m, $15.9m) of fees and interest rates to those hit by its practices, and has agreed to pay a further £10m to its customers.

"It is disappointing that examples of poor practice in the payday market keep surfacing," said Linda Woodall, Acting Director of Supervision, Retail and Authorisations at the FCA.

Standards are generally improving, she said, but "we expect all firms to notify us of any unacceptable past or current practices and provide appropriate redress to anyone affected."

The problem of payday loan practices is not exclusive to the UK, but were highlighted last year by John Oliver in the United States, with this biting investigation.