We shouldn't let smaller payday lenders slip under the radar
With today’s news about Cash Genie facing a £20m redress bill, the payday lender chickens really have come home to roost. For many reasons this is a victory for campaigners.
Earlier in the year I was invited to share a stage with Dr Johnna Montgomerie from Goldsmiths University and Stella Creasy MP to talk about a plan of action for getting people out of debt.
In my conclusion I said that it wasn’t enough that the only payday loans firms obliged to pay money back to people as compensation for irresponsible practices were the ones we’d all heard of.
The Financial Conduct Authority (FCA), which is the body that regulates consumer credit, had gone public after imposing compensation and debt cancellation levies on companies Wonga and The Money Shop – the two largest payday lending firms in the UK.
But today I – and the many other people who have campaigned and researched the practices of the entire payday loans industry – have been vindicated.
Cash Genie isn’t the best known company. When Tom Warren of the Bureau for Investigative Journalism carried out his work on the payday loans industry not long ago, Cash Genie wasn’t even in the top 10.
I worried that because Cash Genie wasn’t altogether that big, its practices would be ignored.
Over the course of my research I’ve heard lots of stories about the practices of Cash Genie. I’d read many stories on forums as well, including one where it drained the money of a borrowers’ account, ‘hounded’ someone with ‘threats’ when they couldn’t repay their loans, and failed to ensure a creditor’s being able to afford payments when they were on benefits.
Today the FCA said Cash Genie has agreed to pay £10m pounds in redress after voluntarily writing off £10.3m in fees and interest. This will affect 92,000 customers who will be compensated for unfair practices.
In their statement earlier, the FCA said the company charged interest and fees which were deemed unfair, such as a £50 bill to transfer customers to a sister debt collection firm – making debtors pay for Cash Genie to transfer files to its own debt collection firm.
The company were also charging unspecified fees against its own rules, and on a number of occasions loans were rolled over or refinanced without checking with the customer first.
There are a small number of people in the country, usually with a vested interest, that say regulation over the payday loans industry presents new dangers. I personally think it’s a worry that so many people rely on debt at all, and that it shows just how much families still struggle, even as we reach a financial recovery.
Stories like today’s remind me that it was right to campaign for tougher regulations and stronger enforcement of existing rules over payday lenders. When regulation was looser these lenders ran amok, making the lives of those in debt even more precarious.
I’m glad about what happened to Cash Genie – who, I should say no longer offer payday loans. It should serve as a reminder to all firms who base their business model on financial exploitation.Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.