On 14 August, Instant Cash Loans (ICL) started sending out emails to 2.6million customers of the Money Shop, Payday UK, Payday Express and Ladder Loans with details about how to vote on its proposed Scheme of Arrangement.
It says customers with an affordability complaint may get 80% of the value of their complaint paid out, but this may be significantly less if a lot of people claim.
80% sounds like a very high figure to me, see Will the Money Shop really pay 80% of your payday loan refund?
If you have just had this email, I suggest you wait a few days beafore deciding whether you should vore in favour of this scheme. Voting can be done online until the 20 September, so there is lots of time to get the full facts before deciding what to do.
On 9th August 2019, the High Court gave us permission to ask people to whom we may own money to vote on whether or not they would like the Scheme to go ahead. We think we may owe you money because you previously took out a loan from us or one of our other companies.
If the Scheme goes ahead, we will ask you to submit a claim and, if we agree that we should not have made you a loan or you have another valid complaint about a loan, you will be entitled to a payment in 2020.
Full details are given on the Money Shop’s website.
Background – increasing numbers of affordabilty complaints
ICL had two million customers, with three big payday lending brands:
- The Money Shop was once Britain’s largest payday lender on the high street. The Money Shop stopped making payday loans in August last year.
- Payday UK and Payday Express were two large online lenders. These both stopped making new loans in October 2017.
In summer 2018, the number of affordability complaints about payday loans increased significantly. Paying refunds on these complaints forced Wonga and Wageday Advance to go under.
In the last half of 2018, ICL received 45,000 complaints. So ICL has been facing escalating costs in the last year and it has been closing shops. Now the business is being closed completely.
You are being asked to vote on the proposed Scheme
ICL is writing to all 2.6 million customers who borrowed from the Money Shop, Payday UK, Payday Express or any of its other brands to ask them to vote to approve the proposed Scheme of Arrangement.
A Scheme of Arrangement is a legal device which limits a company’s liability for some debts. A Scheme has to be approved by a court that will consider if the Scheme is fair.
If you were given a loan which was “unaffordable”, you have a claim for a refund of the interest you paid. The regulator says that a loan is only affordable if you could repay it without hardship and without borrowing again. So millions of payday loans were unaffordable and you may have a claim.
Everyone with a potential claim is a possible creditor. And creditors can vote to approve or reject a Scheme of Arrangement. This is why you have been sent this email.
These emails started being sent out on August 14. They:
- come from email@example.com;
- have the subject: Voting Information – The Money Shop Scheme of Arrangement;
- give you your reference code in the format xxxx-xxxx to let you vote on the scheme;
- do not ask you to reply with any personal information.
What is happening to complaints?
People who accepted an ICL offer before July 31 are getting a full refund
Some people who have already complained are getting their refunds paid in full now and will not go through the Scheme of Arrangement. These are:
1. customers with a Final Decision from the Financial Ombudsman (FOS)?
FOS is a two-stage complaint service. The first stage is called an adjudicator decision. The second stage is from someone called an “ombudsman” and is called a “final decision”. If you have a Final Decision from the second ombudsman stage, this is legally binding and ICL will pay your refund in full.
2. customers who had an adjudicator decision from FOS that ICL accepted
If your FOS adjudicator has agreed with your complaint (for example saying “refund loans 5-12”), and ICL has accepted this adjudicator decision and you have accepted this adjudicator decision by July 31st, then this refund will be paid in full.
3. customers who were made a refund offer by ICL that they accepted before July 31
If ICL offered you a refund when you complained and you have accepted that already, it will be paid in full and you do not need to do any more. If you did not accept the offer, it is now too late to and your complaint will have to go into the Scheme of Arrangement.
All other complaints will go into the Scheme
Apart from the complaints that are going to be paid now in full (see above), all other existing complaints are on hold until the Scheme is approved.
This applies to complaints currently with ICL, including loans from the Money Shop, Payday UK and Payday Express. ICL will not be doing any further work on these complaints. If you are witing for a response, or have sent in bank statements as requested, nothing further is going to happen.
FOS will not now look at these complaints so there is no point in sending them a new complaint. FOS has stopped work on complaints already with it.
People who have not yet complained
If you send a complaint to ICL now, it will be on hold until the Scheme is approved. There is no hurry to do this and you will have to resubmit your claim after the Scheme is approved, so you may as well wait until then.
Do not let a Claims Company send in a complaint for you now. The procedure to submit a Claim will be a simple form, a Claims Company will do nothing but fill out your name and address.
How the Scheme will work
On August 9, ICL received court approval to call creditor meetings. It is now sending everyone an email with an Explanatory Statement with further details about the Scheme and how to vote. these started to go out on August 14.
The next steps are as follows. Each step assumes the previous steps were passed/approved:
- September – meetings of creditors will be held to vote on the Scheme. As a creditor you can vote online before 20 September or vote in person in Nottingham on September 24.
- After approval, customers who have not sent in a complaint will have 6 months to submit a claim.
- All claims will be assessed and if they are decided to be valid, a redress amount will be calculated. There will be some appeal mechanism.
- There will be c £13.6m available to be divided up between the successful Claims. How much you are likely to get will depend on how much interest you paid and how many people submit claims. If a lot of people make claims, you may only get a small amount, but if many people don’t bother it could be larger.
- Payouts are expected to be in late 2020.
I will be updating this article as there is more news. And the comments below show what other customers are thinking.
Did you borrow from other lenders?
This email from the money shop may the first time you have heard about affordability complaints or getting a refund of payday loan interest.
If you have borrowed from other lenders, you may be able to get refunds from them. read How to make a payday loan affordability complaint which explains all this and has free template letters that have worked for thousands of people.
Updated August 14