High-cost lender TFS Loans has been handed a £800,000 fine by for not doing proper checks that customers could pay back loans.
TFS Loans is a guarantor lender, which means it requires a family member or friend to cover repayments if you can’t.
The firm fell into administration in February following claims of “unaffordable lending”.
TFS would lend between £3,000 and £15,000 for one to five years at between 30% and 70% interest, with a representative APR of 39.9%.
But now TFS Loans has been slapped with a massive £811,900 fine by the Financial Conduct Authority (FCA) over its lending practices.
Are you a TFS Loans customer with an on-going complaint? Let us know: mirror.money.saving@mirror.co.uk
The FCA said: "The FCA found that TFS failed to undertake adequate affordability checks on the guarantors who were liable when borrowers were unable to pay their debts.
"TFS’ failure to collect appropriate information on guarantors’ financial circumstances meant some guarantors were unable to afford the guarantees they entered into, risking significant personal financial repercussions and distress, if those guarantees were called upon. This happened in some cases."
The financial regulator added that to make matters worse TFS also charged "excessive" late payment fees, adding extra costs for customers - and breaking its own rules.
Anyone left out of pocket by TFS will be able to bring a claim against the firm.
But confusingly this £811,900 fine is not part of this compensation.
Here's how it works.
Why has TFS been fined?
The FCA has fined TFS for breaking its rules on how lenders should operate.
The financial regulator found several issues with how TFS treated customers between November 2, 2015 and April 10, 2018.
But the fine cash will not go to customers - instead, it will go to the Treasury.
Can I still claim against TFS?
Yes. An FCA spokesperson told The Mirror: "There could be people who are due redress payments."
A statement on the TFS website said: "The administrators of TFS Loans are in the process of devising a methodology for dealing with customers who may have suffered a loss as a result of TFS Loans’ lending practices.
"Such customers may be eligible for redress."
When can I make a TFS claim?
TFS customers will have to wait a bit before their claim can be heard.
That is because the administrators of TFS, Opus Restructuring, are now working out how this can be done.
The TFS website said the wait is because Opus are still designing a claims system.
How can I make a claim against TFS?
Until a proper claims system is set up, TFS customers who think they have been affected should email complaints@tfsloans.co.uk.
How much money will I get from my TFS claim?
At the moment it is impossible to say.
If you are owed any money by TFS this could take the form of money off your loan, or a cash payment later down the line.
However, any customer trying to get redress from TFS will be classed as an 'unsecured creditor'.
Simply this means they are on the bottom rung of the ladder when it comes to getting payments.
TFS will have to pay any money it owes to 'secured creditors' first, then get round to paying unsecured ones.
The TFS FCA fine will only be paid once the lender has paid out customers and businesses it owes money to.
Do I need to keep repaying my TFS loan?
In short: yes.
The administrator Opus Restructuring has said customers should continue to repay their loans.
However, TFS is no longer able to issue new loans.
If you're struggling to meet your repayments, the TFS Loans website says you should contact 01268 740 755 for support.
TFS refused to comment. Opus has been approached for comment.
