31st July 2015
Cash Genie was established in 2009 and offered payday loans to individuals, starting from £75. The company suffered from bad reviews and complaints from the offset, however, the extent of their failings was only realised after an independent review in 2014.
After the review in 2014, Cash Genie ceased trading in September 2014. They are not alone; following the implementation of fee caps and other regulations, over 100 payday loan lenders ceased all trading. Larger companies such as Wonga, who were still able to operate profitably remained in the market but opted to cut jobs to reduce costs.
Cash Genie were found to have numerous failings which resulted in conduct that was deemed ‘unfair’ by the Financial Conduct Authority. One of these failings were the unjustified transfer fees; Cash Genie charged customers £50 for transfers to their sister firm even though there was no additional cost to the company itself. They were also found to have rolled over borrower’s debts without getting explicit consent or checking the borrower’s financial circumstances. This meant that borrower’s debts quickly spiralled out of control and became unmanageable.
Another failure by the company was their failure to provide yearly statements to borrowers who had overdue debts but still continues to charge interest on the balance which is against regulation.
Cash Genie also violated regulations by passing on borrower’s information to other lenders owned by Ariste Holding Limited, which also owns Cash Genie. These lenders then contacted people for supposed ‘pre-approved’ loans. This was all done without the consent of the individuals involved.
As a result of the investigation into the operations of Cash Genie, the FCA have agreed on a redress package for the affected borrowers. Cash Genie plan to contact all the affected borrowers by the 18th of September 2015; they estimate that they will compensate around 92,000 customers who were victims of Cash Genie’s faults. The agreed package includes a £10 million redress directly to customers in addition to over £10 million of debt that has already been written off by the company. The total compensation bill amounts to £20 million and acts as a serious warning to other lenders. The FCA has made an example of Cash Genie to show it is serious about the crackdown on unfair lending practices.
Borrowers should be advised that they do not need to take any action as all those affected will be contacted in due course. The fault falls with Cash Genie and Ariste Holdings for their failure to uphold an acceptable moral standard and failing their obligation to their customers. Many short-term borrowers are already financially vulnerable and rely on payday lenders for a suitable solution in times of need. It is important to research lenders before taking out such loans; be sure to look at all the conditions and reviews online before making any commitments. Don’t let a short-term loan to cause problems for your financial future- one bad encounter can leave a mark on your credit rating for years to come.