Payday lending companies have taken something of a beating from the Financial Conduct Authority of late with first Wonga and now Dollar financial having to refund customers millions of pounds.
Dollar Financial is the latest payday lender to provide refunds to its customers. A review by the FCA has led to the firm being forced to pay compensations to customers of The Money Shop, Payday UK, Payday Express and Ladder Loans.
Pay day lending is still a relatively new form of finance that has grown rapidly in recent years. The sector has been helped by tighter lending from the banks which has driven people towards short term lending.
While pay day lending can seem like the ideal alternative to other forms of finance with acceptance and money being transferred quickly, interest rate are extortionate and if loans are not settled on time this can drive people into a mountain of unwanted debt.
As a result of many people suffering difficulties with repayment, investigations have lifted the lid on inadequate debt recovery procedures and various other problems with the way payday lenders are dealing with customers.
According to reports, Dollar financial will be forced to refund £15.4m to 147,000 customers.