Pawnbroker H&T has announced it will refund customers more than £2million after a review of a group of loans found more than one in 10 should never have been granted.
The company said it examined a number of loans made between April 2014 and October 2019 and found 9,800 loans to 8,000 customers that should have been rejected.
These loans account for approximately 11.5% of the total unsecured, high-rate, short-term (HCST) borrowings the company borrowed during the period.
“We are pleased that the review is now complete and that the majority of H&T’s HCST loans are considered responsibly originated,” said Chief Executive Chris Gillespie.
Expensive, short-term, unsecured loans are no longer part of the Group’s product offering
Chris Gillespie, H&T
He added, “H&T’s Board of Directors is acutely aware of the concerns and uncertainties this review has created for all stakeholders.”
The company has been reviewing these loans since 2019 and has now received approval from the Financial Regulator promote a compensation system for customers.
The company said it would pay £1.6million direct to customers in redress and a further half a million will be available to adjust the balance of their outstanding loans.
On average, each customer gets £264, the company said.
“Customers whose credit should not have been granted and are due for redress will be contacted directly and we will endeavor to complete the redress program as soon as possible so as not to prolong the uncertainty any further,” Mr Gillespie said.
“H&T is committed to providing services that ensure the highest standards of customer care and regulatory compliance and we have worked extensively and constructively with the FCA throughout this review.
“High cost, short-term, unsecured loans are no longer part of the group’s product offering.”