I have asked Instant Cash Loans (ICL) what percentage rate will be paid in the ICL Scheme of Arrangement and when customers will be paid.
I am told the Scheme will be paying 4.3p in the £ to customers who are due a refund. Some payments are starting this week, they are expected to complete by the end of June 2021.
UPDATE – ICL have now officially said it will be 4.31%
Which customers are getting refunds?
This Scheme covers customers who borrowed from the Money Shop, Payday UK, Payday Express and Ladder Loans.
These were big payday loan brands owned by ICL. The Scheme was set up in 2019 when ICL could not afford to carry on paying refunds to customers making affordability complaints.
There was a six-month period for customers to submit affordability claims. The Scheme Reports show that c.180,000 claims were received by the Scheme and 85% were upheld.
ICL had already stopped lending when the Scheme started and there was no intention for it to resume lending. In March 2020 the formal decision was taken to place ICL into liquidation – this does not have any impact on the Scheme paying out to its customers.
The total redress calculated by ICL for upheld claims was c. £335 million but there is very little money in the Scheme to pay these refunds.
When the available money is divided up, customers will be paid 4.31p for every pound in the redress total that ICL has calculated. So someone owed a refund of £1,000 will receive £43.10.
When the Scheme was first proposed, it was suggested that customers might receive about 80p in the £.
That never looked realistic, as I explained in Will the Money Shop really pay 80% of refunds? No!
My prediction back in August 2019 was “an average payout of about 4%”. Pretty close!
When payments will be made
The first payments are going out by cheque to customers where ICL does not have their current banking details. These cheques were being posted on 17 May 2021.
These will be followed on 24 May by the first batch of BACS payments to customers’ bank accounts. Further batches will follow. All payments are expected to be made by the end of June 2020.
Customers are being divided into batches for bank transfers at random – it is not by name, size of payments or the bank you are with.
You will be told by email how much you will receive shortly before the bank transfer is made.
There is no point in trying to contact ICL to ask which batch you are in or whether you can be paid sooner. You will not get an answer and you will make it harder for ICL to resolve other customers’ problems.
What do customers think of 4.31%?
For some time now, the Scheme Reports have been predicting a payout in the 4 to 4.2p region. So this is very slightly more.
The comments show customers’ reactions:
- some people think it’s good to get something, however little back;
- some are horrified it is so little but say at least these lenders are now out of business, which is good;
- others think it is shocking and something should be done to get proper compensation paid.
When a PPI firm went under, the Financial Services Compensation Scheme (FSCS) ensured that any consumers owed PPI refunds were paid in full. But the FCA decided not to extend the FSCS to cover payday loans.
Have your say…
If you would like to comment on this or see what other customers are saying,
please go to the main Scheme page which is kept updated:
Money Shop, Payday UK / Express – Latest Scheme news