Credit card firm NewDay is due to refund over £4 million across at least 180,000 customers following disclosures made to the Financial Conduct A…
Credit card firm NewDay is due to refund over £4 million across at least 180,000 customers following disclosures made to the Financial Conduct Authority (FCA).
In 2015, the firm reported that it had undertaken a review of its business ahead of the regulator's new regulatory regime for credit, which was conducted from April 2014. This included a review of the fairness of its charging model.
From this, NewDay identified that, in a small number of cases, default fees and other charges triggered additional charges in a way that they considered unfair. In addition, delays in posting transactions also meant some customers incurred additional charges that the firm felt were unfair.
It immediately proposed to make a series of changes, including the removal of some of the circumstances when default fees may be charged, as well as the creation of a suite of tailored alerts to enable customers to avoid incurring fees by making prompt payments. More recently, NewDay also proposed to provide redress to the impacted customers, which the FCA will be monitoring.
It's estimated that around three per cent of NewDay customers will be due redress under this scheme.
Jonathan Davidson, director of supervision for retail and authorisations at the FCA, said: "The FCA welcomes NewDay’s proactive approach to ensuring it treats customers fairly. The FCA expects all firms to consider the fairness and impact of their default fees and charges. It is important that firms, where they identify concerns in relation to their fees, disclose those concerns to the regulator, proactively act on those concerns and keep the regulator informed.
"NewDay has disclosed this matter to us and has committed to putting things right for its customers. Where firms identify unfair overcharging within their policies and systems we would encourage firms to undertake similar initiatives."
Customers within the scope of the scheme do not need to take any action, as the firm will be writing to them over the next two to three months. In most cases, the customers will receive credit on their account, although a limited number of customers will receive a cheque for the money that is owed. Additional compensatory interest payments may also be offered to some customers, depending on their individual circumstances.
All necessary steps to contact historic customers will be made by the firm.
This new scheme will not cover customers charged the relevant fees before April 1st 2014, although the firm will consider any complaints made in respect of these on a case-by-case basis.