On 4 November 2020, KPMG, the Administrators of Elevate Credit International, started to email more than 500,000 Sunny customers who could get a refund for some of their borrowing.
The Administrators have developed a Claims Calculator to work out which loans were likely to have been “unaffordable”.
If you get this email it is because they have decided some of your loans were unaffordable.
Sunny had about 700,000 customers, so for 500,000 of them to have been mis-sold loans is a shockingly large number.
By contrast, the Wonga administrators only had to pay out to about 400,000 customers. (Although that was because not all Wonga customers put in a claim. The Sunny administrators have been fair and assessed all customers. So we know that half a million figure is right.)
The Administrators are also warning there may not be enough money to distribute if too many people make claims. Even less than the Wonga customers received.
Background to the Sunny administration
- Affordability complaints: How to get a payday loan refund – with template letters
- Sunny’s payday lending – concerns about regulatory clarity
- Kerrigan v Elevate – Sunny loses a major court case
- Sunny goes into administration
- Sunny administration – some loans written off & the rest sold to a debt collector
No refund unless you made a claim
You won’t be automatically paid a refund. When you have this email, you still had to submit a claim for your refund.
If you disagree with the amount calculated, you can manually submit a claim for another amount for assessment by the Administrators. As so little will be paid out you may feel there is no point in doing this.
The deadline for claims has now passed.
You may only get 1% of that redress… or nothing!
You will not get the full amount of that redress figure that has been calculated.
The Administrators are warning that there is very little money to distribute – they call this “a dividend”. If too many people claim, there may be nothing:
If a very high volume of claims and queries is received, it is likely that the operating costs of responding to queries and processing and adjudicating claims will become so high that no funds will be available for a dividend to be paid to creditors.
If a lower volume of claims and queries is received and a dividend can be made, the dividend is likely to be a very low percentage of your claim… we estimate that any dividend payable could be less than 1p in the £ and that any payment would likely be made in Spring 2021.
If it is decided that there aren’t enough funds to pay any dividend, the Administrators will apply to the court for permission to donate the remaining money to a debt charity.
Your credit record should have been cleaned for unaffordable loans
The only good news here is that the Administrators decided to automatically clean up your credit record if they decided you had unaffordable loans:
- for the first five of the loans that have been decided to be unaffordable they will remove any defaults or missed payment markers;
- all unaffordable loans after the first five will be deleted from your credit record.
This is trying to follow what the Financial Ombudsman typically did in Sunny cases where there were a lot of loans.
The credit record updates and deletions should have been done automatically by the administrators by the end of November 2020.
If there is any chance you may want to make an affordability claim in future about anything – credit card, overdrafts etc not just high cost loans – then I suggest you immediately take a copy of your credit records while they still show the Sunny loans. See Get your credit records for free for how to do this.
But what if your credit record still isn’t right?
In January 2021 people were still saying their credit records weren’t correct. Some people had loans deleted then added back again.
Experian seems to be sorting things out but not Equifax or TransUnion. But you need to check all three CRAs to be sure what has happened to your data.
If you think Sunny hasn’t corrected yours properly then it’s no use asking the administrators. They say:
We have transferred the control of maintaining any remaining records to the credit rating agencies, as we will not be maintaining these records going forward. Any further queries regarding entries on customers’ credit files in relation to ECIL loans should be raised with the relevant agency directly.
So many people have been asking how to do this that I have written a separate article on it: How to correct your credit record if the lender has gone under.
“Ripped off by Sunny, now let down by the regulators”
Many people will feel horrified when they see all the loans that have been assessed as unaffordable and the large amount of interest they paid on those loans.
It isn’t the Administrators fault the refunds will be so low, they are just dividing up what money there is.
It is the Financial Conduct Authority’s (FCA) fault:
- despite the rules about checking affordability, Sunny was allowed to carry on lending;
- the FCA didn’t insist Sunny had enough capital to pay out compensation claims; and
- the FCA hasn’t provided any back-up scheme to pay the compensation. If a PPI firm went bust, you would still have received a PPI refund in full from the FSCS scheme – but that doesn’t apply to payday loans.