PAYDAY lender Shelby Finance has apologised to customers and written off £500,000 of loans after failing to provide statements to borrowers.
The Competition and Markets Authority (CMA), which checks that companies are behaving fairly, found that Shelby hadn’t provided borrowing summary statements to more than 15,000 customers between August 2018 and July 2019, despite being required to do so by law.
These statements are meant to help customers manage their money because they set out information including how much interest or fees they are expected to pay and when their next payment is due.
This information can also help customers shop around for a loan that best suits their needs.
The CMA said that because research shows that payday lenders are often used by more vulnerable customers, it was concerned about the impact that the breach might have had.
Shelby Finance has agreed to write off loans worth £527,863 for some of the customers affected.
It has also apologised, sent late summaries of borrowing to customers by email and made previous summaries available online.
It has also put measures in place to make sure the same problem does not occur again.
How to cut down your overdraft costs
THERE are a few ways to cut overdraft costs, and which suits you will depend on your situation. Here are a few options advised by MoneySavingExpert:
Spend less each month – do a proper budget and have a look at what you’re spending on.
Could you cut your morning coffee, or go down a brand at the supermarket?
Or, are you paying too much on your bills – if you haven’t switched energy, insurance and broadband recently, then it’s likely you could save £100s or even £1,000s over a year.
Move your bills – this can be dangerous if you’re not disciplined, but if you move your bills to just before payday rather than just after, many will be in credit (or less in the red) for less of the month, meaning you’re charged less for the overdraft. But – remember those bills are coming out, so don’t treat it like you’ve extra money to spend.
Move bank account – there are plenty to choose from and you can end up saving money.
Shift your overdraft on to a money transfer card – and don’t build it back up again.
Try setting up "pots" – sort your cash at the start of each month, so you have a bills pot, a spending pot etc. Use this technique to make payments to your overdraft, eg £100 a month, treating it like any other bill.
Seek advice – If you’re confused then seek expert financial advice. Citizens Advice, StepChange or The Money Advice Trust will all help you for free.
The CMA will continue to monitor its progress and may take formal enforcement action if further breaches take place, it said.
Alistair Thompson, director of remedies, business and financial analysis at the CMA, said: “The summaries we require payday lenders to send to customers are crucial in helping borrowers make informed decisions about their loans.
“While it is disappointing to see so many customers not being properly informed, Shelby Finance’s commitment to writing off £500,000 in loans will help put this right.
“We will continue to monitor the situation and will take further action if needed.”
In February, TSB announced it would offer short term loans to help customers who would otherwise dip into overdrafts or use payday loans.
Meanwhile, payday loan firm Sunny went into administration at the end of last month.
Rival firm Peachy has also collapsed this year.
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