Payday lenders told to offer compensation for mis-sold loans

FCA says firms must pay out to settle complaints even if it threatens bankruptcy

The City regulator has ordered payday lenders to bring forward compensation for customers who were mis-sold loans, even if it threatens the company with bankruptcy.

In strongly worded letters to firms in the high-cost short-term credit market, Jonathan Davidson, the director of supervision at the Financial Conduct Authority (FCA), set out how firms should respond to a recent surge in complaints over unaffordable lending.

It follows the collapse in August of Wonga, the payday lender that became notorious for its extortionate interest rates and was a symbol of Britain’s household debt crisis. Wonga was laid low by new rules cutting the amount of interest it could charge, and was finally pushed into administration by a welter of compensation claims for past mis-selling.

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https://www.theguardian.com/money/2018/oct/15/payday-lenders-compensation-mis-sold-loans-fca-complaints