H&T Shares Tank 25% Following Payday Loan Lending Probe By FCA
Payday loan lenders continue to draw significant criticism because of the high-interest rates that they attract. The latest company to be on the receiving end of the crackdown on payday lenders is pawnbroker H&T.
On Monday, H&T shares tanked 25% following revelations that the City watchdog was investigating the company. The company allegedly mis-sold high-interest rate short-term loans to consumers. It is the latest onslaught on expensive payday loan lenders after the demise of Wonga and QuickQuid.
The Financial Conduct Authority is already reviewing operations of the company that runs over 250 pawnshops in the UK. H&T has indicated that it is closely working with the FCA on specific aspects of its unsecured short term loans. Already H&T has temporarily ceased offering high-cost short term credit as it focuses on the review process.
The review process entails the pawnbroker's lending processes of HCSTC and creditworthiness assessment. It is in line with the changes in lending regulations regarding affordability assessments. The FCA will be looking at the company's lending practices since 2013. It will involve determining whether there will be any customer redress for expensive loans they could not afford.Best injectable steroids in schaffhausen switzerland - buy steroids for bodybuilding singanitropin how to burn belly fat bodybuilding - whitening lightning.
The company’s different segments charge interest of between 49.9% and 1,288% per year. H&T indicates that in that period, interest payment for the short term loans was around £24 million. The company is confident that it can fund any payable redress from its current financial resources.
In November last year, regulators instituted new consumer lending rules tightening requirements on affordability before giving credit. Executives of payday loan companies received the changes from the FCA in October last year.
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However, short-term loan lenders have indicated that restricting the loans could push consumers to loan sharks ahead of Christmas. H&T CEO John Nichols said that this is not the ideal time as people are busy with Christmas preparations. It is a period when lenders issue short-term loans, and thus, restriction could push consumers to unregulated lenders.
Payday loan lenders have been struggling with a growing number of compensation claims. For instance, last month QuickQuid went bust following an increase in customer complaints. The claims involved the lender selling consumers unaffordable loans.
Enova, the parent company of QuickQuid, said it was leaving the UK market because of regulatory uncertainty. The company could not reach an agreement with the ombudsman on the settlement of compensation claims. The company was placed under administration. Its closure comes a year barely after Wonga went bust under similar circumstances. The collapse of the payday loan lenders left thousands of borrowers in uncertainty.