H&T Group PLC (AIM:HAT) said it will start implementing customer redress payments of its closed unsecured high-cost short-term (HCST) loan book this month.
The pawnbroker has been working with the Financial Conduct Authority (FCA) to carry out a review of the lending processes, credit worthiness and affordability assessments within its HCST business between April 2014 and October 2019, when it ceased lending.
The review has determined that a total of roughly 9,800 HCST loans to around 8,000 customers should not have been granted, the company said, representing 11.5% of HCST loans and 12.6 % of HCST customers during the period.
A total of £2.1mln of redress will be paid, including statutory interest up to 31 March 2022, taking account of any withholding tax, with eligible customers set to receive an average of £264.
As confirmed in its full-year results last month, H&T had made a provision of £2.1mln in anticipation of the review and subsequent redress programme.
It is anticipated that professional, operational and implementation costs relating to the review and the redress programme will amount to approximately £0.6mln, which has also been provided for in previous accounting periods, the company said.
Customers who are eligible to receive redress either in the form of cash or balance adjustment will be contacted directly, beginning this month, it added, with the process expected to be completed within 12 months.
Chief executive Chris Gillespie said: "The board of H&T is very aware of the concerns and uncertainty that this review has caused for all stakeholders. 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."
He added: "H&T is committed to providing services which maintain the highest standards of customer care and regulatory compliance, and we have co-operated fully and constructively with the FCA throughout this review. High-cost short-term unsecured lending no longer forms part of the group's product offering."