TWO payday lenders went bankrupt, leaving 650,000 clients in limbo as to what to do about their loans.
Distressed lenders WageDayAdvance and Juo Loans are both owned by the same parent company which filed for administration yesterday.
Over 50,000 clients of Curo Transatlantic Limited (CTL), including all of Juro’s borrowers, have been sold to Shelby Finance, which is owned by Morses Club.
These customers will be notified of their transfer in the coming days and refunds should continue as normal.
But 650,000 customers – including those who no longer have credit – will stay with CTL.
A spokesperson for the KPMG administrators told The Sun that customers who make their refunds through an agent should continue to do so.
Borrowers who pay off their debts by direct debit or other card payment will not be able to make payments while administrators decide what to do next.
Until then, all interest and fees will be temporarily frozen, although it is not clear for how long.
WageDayAdvance was handling thousands of compensation claims from borrowers accusing it of irresponsibly lending £ 18million in total, charging fraudulent interest rates and targeting vulnerable customers.
Ed Boyle of KPMG said the sale of part of the business was the “best outcome available” for CTL’s creditors under the circumstances.
He added: “Over time and with the increase in the number of complaints, the financial and operational burden of resolving them has become unbearable.
“The Joint Administrators will now focus on realizing the remaining assets of the Company and then distributing the available funds to creditors.”
The closure of the company follows in the footsteps of Wonga, which went bankrupt in August last year for the same reasons.
At least 1,930 WageDayAdvance customers have filed compensation complaints with the financial mediator, although there are potentially thousands more who may have filed claims directly with the company.
How to claim compensation from payday lenders
IF you think a payday lender owes you compensation, here’s how to make a claim according to money blogger DebtCamel:
You will need to prove that you could not afford the loan when you borrowed it. If having the loan meant you couldn’t pay your bills or other debts, then you were loaned irresponsibly.
You may also be entitled to compensation if you have had late repayments, or have taken out back-to-back loans as this shows that you really could not afford a new one.
Examine your emails, bank statements, and your credit reporter for evidence.
You will need to write an official complaint letter to each lender explaining how you were irresponsibly loaned out and include the evidence.
You will have to cite “unaffordable loans” and ask for reimbursement of the interest and fees you paid, as well as the 8% interest from the Ombudsman on top.
Make copies of all evidence before sending it in in case something happens to them.
Also request that the loan be removed from your credit report.
You can find a sample letter here.
Wait up to eight weeks to hear from them. If you are not satisfied with the response or they do not respond to you, contact the financial mediator.
Administrators are currently planning how to distribute the remaining funds, although it is still not clear whether there will be enough money to reimburse customers who have already submitted a compensation claim.
KPMG has also confirmed that it will contact former clients who it believes may be owed money to it and encourage them to file a complaint.
If the process looks like what happened to Wonga customers, companies will immediately stop paying refunds, including those that have already been agreed.
Complaints registered with the Ombudsman will be referred to administrators and customers are only likely to get a percentage of the refund they are owed.
It could take months for these requests to be processed and for payments to be made.
WageDayAdvance stopped lending to customers a week ago, blaming technical issues on its website, according to Debt Camel.
Yesterday, the Financial Conduct Authority rejected a request by the company to cap the amount it reimburses to customers.
Debt activist Sara Williams, who heads Debt Camel, said: “WageDay Advance has provided payday loans to hundreds of thousands of customers, in many cases without performing adequate affordability checks.
“These clients have been abandoned twice by UK regulators.
“Wageday Advance has been allowed to get away with irresponsible lending for years and now that it has gone into administration, the people who complained are unlikely to get proper compensation for it.”
Payday lenders have been criticized for dragging their feet on bad sale payments.
Here is our guide on whether you are entitled to compensation and how to claim the money.
We pay for your stories! Do you have a story for the Sun Online Money team? Write to us at [email protected]