Payday lender Cash Genie to pay £20m in compensation to customers

Cash Genie imposed unfair fees and levies on 92,000 borrowers

The payday lender Cash Genie has been forced to pay £20m to ripped-off borrowers. The high-cost credit company – owned by Ariste Holding – has agreed with the Financial Conduct Authority (FCA) to hand over the cash to more than 92,000 customers for unfair practices.

The firm used a number of ways to rip off desperate borrowers who turned to the firm for short-term loans. Shockingly, from the day it was launched in September 2009 to profit from the number of people pushed into poverty by the credit crunch and recession, Cash Genie charged fees which it was not entitled to under its customer contracts.

For instance, it charged people who were unable to repay their loans £50 to transfer them to its own debt collection firm, Twyford Developments, even though it incurred no fees of its own. That was blatantly ripping-off struggling people.

Joanna Elson, chief executive of the Money Advice Trust, said: “That some Cash Genie customers were charged an extra £50 for the privilege of being transferred to their debt collection business is even more shocking when you consider that of all their customers, these were in the most financial difficulty. This is just one of several practices for which borrowers deserve redress.”

Other unfair practices included loans being rolled over or refinanced – adding on extra interest and costs – without the customers’ consent.

The company also traded under the online brands txtmecash and paydayiseveryday. Struggling Cash Genie borrowers were encouraged to turn to the websites on the promise they would be given a fresh loan, but the sites were used to collect banking information from customers so the lender could take payment for existing loans without their permission.

Martin Lewis of moneysavingexpert.com said: “We knew when Wonga had its wrists slapped twice last year after its horrendous practices that it was just the tip of the iceberg. Cash Genie is the next big one and I very much doubt it will be the last. The payday lending industry has been a parasite on this country; it lived in a lacuna of regulation for far too long.”

The redress package agreed with the FCA will consist of a combination of cash refunds and balance write-downs.

Linda Woodall of the FCA said: “We expect all firms to notify us of any unacceptable past or current practices and provide appropriate redress to anyone affected.”

Customers do not need to take any action, the City watchdog said. Cash Genie aims to contact affected customers by 18 September. There is more information for anyone who thinks they may have been affected on the FCA and Cash Genie websites.

Gillian Guy, chief executive of Citizens Advice, warned the FCA to continue to keep a close watch to ensure payday lenders are sticking to the rules while Which? executive director, Richard Lloyd, said the regulator should examine unfair practices and excessive fees across the credit market.

Francis McGee of the StepChange Debt Charity said we need better protections for people in debt: “The Government has promised a review of proposals to give ‘breathing space’ to those in financial difficulty, and we look forward to hearing details.”