Dublin-based student lender Future Finance was forced to repay €2m for breaching credit laws

The fintech company was over €20m in the red last year.

By Jonathan Keane Reporter, Fora

DUBLIN-BASED STUDENT loans platform Future Finance was forced to refund €2 million to borrowers after breaching UK consumer credit laws.

The fintech firm, which provides loan financing to students, found that it had been incorrectly charging interest to certain customers.

The company told Fora that a number of its earlier customers were affected by a “technical irregularity in the company’s compliance with the UK’s Consumer Credit Act 1974.”

The issue was self-identified by Future Finance, it said.

“Future Finance ascertained from the conclusion of this due diligence that in some instances statements were not sent on time due to the manual portion of the loan servicing processes on older loans,” the company added.

Under the regulations, interest cannot be applied if statements are not sent on the correct dates.

According to the latest accounts for the company, it booked interest income of €2.9 million in the financial year ended December 2017. This was down from €3.5 million in 2016.

Interest income refers to the money that Future Finance makes from interest on loans it issues. Initially the company had recorded 2017 interest income of €5.1 million before the violations were discovered.

A spokesperson said that the company alerted the authorities about the breach.

“To avoid a repeat of this issue, Future Finance has since implemented an automated loan software system solution to generate customer documentation and send them within the time-frames required by the UK’s Consumer Credit Act 1974 .”

Most of the company’s employees are in its Dublin headquarters but its business is mainly active in the UK market where it is regulated by the UK’s Financial Conduct Authority.

Losses

Overall, the company suffered losses of €20.3 million in 2017 after tax, compared with losses of €15.8 million the year prior.

Along with the repayments to its customers, Future Finance also recorded a €4.5 million loss on the sale of a portfolio of its loans. The carrying value of the loan assets had been recorded as €63 million.

According to the Future Finance’s latest filings with the Companies Registration Office, it expects the “current level of activities to continue” but added that recent investments in the company will buoy its operations.

In May, the company announced a new £100 million debt facility, which followed a Series C equity round in February of €40 million. Founded in 2013 by Brian Norton and Vishal Garg, it has raised around €400 million in debt and equity funding to date.

The company has designs on expanding into the wider European market. Alongside its Dublin and London locations, it has an office in Chicago for data analytics and support services.

The company’s filings acknowledges the risk of Brexit on its revenues moving forward. These risks include changes to interest rate policy in the UK and eurozone.

It also suffered a foreign exchange loss of €586,369 in 2017 due to the weakening pound, but this loss was down from €1.5 million in 2016, the year of the Brexit referendum.

In June the company appointed a new chief financial officer in Jeff Jackson, a former vice president at Goldman Sachs and UBS. Former chief executive Brian Norton also moved to a role as executive vice chairman last year.

He is now heading up startup Supply Finance, which provides loans to SMEs. The company raised €4 million in April.

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