H&T to pay £2.1m in high-cost loan redress

H&T Group updated the market on the review of its lending processes within its unsecured high-cost short term (HCST) loans business on Monday, confirming it would be paying over £2m in redress to customers.

The AIM-traded firm said the review, which was launched in November 2019, was of business conducted between April 2014 and October 2019 .

It said a methodology for conducting the required past book review was developed in close collaboration with the “skilled person” as agreed with the Financial Conduct Authority (FCA).

Following an initial review by the FCA, ‘outcomes testing’ was undertaken by the skilled person.

After further review by the FCA and the development of a methodology, the FCA confirmed that H&T could now proceed to implementing the past book review, and the resulting customer redress arrangements.

Following application of the review methodology, the company said 9,800 HCST loans to 8,000 customers should not have been granted, representing 11.5% of HCST loans and 12.6% of HCST customers during the period.

Redress would be paid for those loans in accordance with the methodology, including statutory interest up to 31 March 2022, taking any withholding tax into account.

In total, the cost of the redress would amount to £2.1m, of which £1.6m would be paid directly to customers and £0.5m would be an adjustment to the balance of current outstanding loans.

On average, eligible customers would receive redress of £264.

Customers eligible to receive redress either in the form of cash or a balance adjustment would be contacted directly from this month.

H&T said the process was expected to be completed within 12 months.

A provision of £2.1m was raised in the group's financial statements for the year ended 31 December, to cover the cost of the redress.

In addition, the company said it expected professional, operational and implementation costs relating to the review and the redress programme would total £0.6m, which was fully provided for in previous accounting periods.

“The board of H&T is very aware of the concerns and uncertainty that this review has caused for all stakeholders,” said chief executive Chris Gillespie.

“We are pleased that the review is now concluded and that the majority of HCST loans granted by H&T are considered to have been lent responsibly.

“Customers whose loan should not have been granted and who are due redress, will be contacted directly and we will endeavour to complete the redress programme as quickly as we can, so as not to prolong the uncertainty further.”

Gillespie said H&T was committed to providing services “which maintain the highest standards” of customer care and regulatory compliance, adding that it cooperated “fully and constructively” with the FCA throughout the review.

“High cost short term unsecured lending no longer forms part of the Group's product offering.”

At 1150 BST, shares in H&T Group were up 1.45% at 343.91p.