A “Scheme of Arrangement” is in place paying some money to borrowers from the Money Shop, Payday UK or Payday Express who were given unaffordable loans and who submitted a Claim before the deadline in April 2020.
It is now too late to submit a Claim if you have not already done this.
The following information comes from the latest Scheme report dated 22 May 2020:
- 182,566 Claims were received;
- it is expected that c 85% will be upheld;
- it is expected the total compensation value calculated will be c. £336 million;
- scheme costs have risen so there will be less money to distribute;
- the current estimate of the amount people will get paid has fallen to 4.1p in the pound/£;
- the scheme administrators warn that “we consider a prudent estimate of the final outturn to be between 3p/£ and 4p/£.”
- the scheme is being extended by a couple of months and it is now expected that the payout will be in April or May 2021.
Contents
3-4p in the £ – when 80p was originally suggested…
This is a dismal update for the 155,000 people that should receive some compensation. Not only will it not be paid for another year, but once again the projected payout has fallen.
When the Scheme was proposed in August 2019, it was suggested people might get back nearly 80p in the pound.
My first thought when I saw the 80p in the £ estimate was “and pigs might fly“… see Will the Money Shop really pay 80% of your payday loan refund?
And that has turned out to be spot on…
In September it admitted that:
- it has decided to include all loans over 6 years which may reduce this to c. 44p.
- it has decided to simplify the assessment in favour of the customers, which may further reduce this to 27p.
- if twice as many people apply for a refund, this may go down to 14p.
By February 2020 in the previous quarterly report, the scheme administrators were warning this could be less than 10p.
So the latest report is a shocker. 3-4p in the pound will be even less than Wonga and Wageday Advance have paid.
The only people that are doing well from these administrations and schemes are the accountants and lawyers.
Background to the Scheme
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 because of the cost of these complaints.
A Scheme of Arrangement is a legal device which limits a company’s liability to its creditors. ICL is using this to limit the amount it has to pay out.
The Scheme was approved by creditors in September and by the Court on 8 October 2019.
A claims portal was put live and all Claims had to be in by April 9 2020.
Why won’t the FSCS help these customers?
The Financial Services Compensation Scheme (FSCS) covered people making PPI claims if their firm had gone bust.
But the FSCS doesn’t cover payday loans. This was a very poor decision by the FCA.
Customers of the Money Shop, Payday UK and Payday Express have been let down badly by the UK regulators. The lenders were allowed to carry on giving loans that breached the affordability rules for years. And now there is no backup compensation scheme for when a lender goes under.
Did you borrow from other lenders?
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 June 2020
Refunds from Provident & other doorstep loans
Get a refund from a guarantor loan
Refunds from large bad credit loans
Michelle says
I, like others, have today had notification that my loans have been removed from my credit file. But when I log on to the portal, my claim is still at “submitted” stage. Although I’m pleased that the record of these has been removed, how can they remove them without assessing my claim? I’m confused!
Alex says
I had the same with OnStride. I try to find out what going on.
dan says
was your loan paid off – or were you still paying it off?
Chris says
I almost forgot about this one. After Wonga, I thought I’d heard back from them all, hence I haven’t been on here for ages but I also submitted a claim for this Money Shop one as well last year but because it covers more than one lender, I couldn’t remember if I’d already heard back from them or not. I remember getting a loan from Payday UK once which comes under Money Shop I believe.
Like with Wonga, I’m not expecting much and, again, just like Wonga, the Administrators are being really woolly about exactly, when and how much. last year they said we would hear from them this year now we’re halfway through the year. and so far, nothing. It’s a good job I don’t have to rely on it but I know there are many who do and I know what it’s like to have to wait and wait for something that you need, I’ve been there.
I would imagine I won’t get much because I only borrowed £100 from them as I recall, which means I’ll probably be looking at literally a few quid at the most but there will be others who will have borrowed much more than that ought to be getting a lot more but sadly it seems as though they will be very shortchanged.
Alex says
Hi Sara,
What’s the deal with an upheld complaint loan being sold on to debt collectors? I defaulted on my PDE loan at the end of Dec 2016 and it was sold to PRAC Financial / BW Legal. PRAC / BW continued reporting the loan as 4 months in arrears every month for 2 years until it was settled. I’m currently dealing with their refusal to set the correct default date — apparently very few companies can manage this simple task correctly!
As all PDE records are being removed from credit histories should the PRAC/BW entry also be completely removed?
Thanks
Sara (Debt Camel) says
did you put in a claim to PDE?
Alex says
Yes, as part of the redress scheme. All of the loans I’ve taken with them have has complaints upheld as I was already in a bad way with Wonga loans when I started borrowing from PDE. I’ve had ClearScore (Equifax?) notifications that all PDE loans I took are being removed from my credit file.
Sara (Debt Camel) says
have you asked PDE what they will be doing about the debt with aa debt collector now they have decided it is unaffordable?
Wayne says
That’s the number 1 question that nobody knows the answer to
Alex says
The administrators never reply to emails and the people on the phone have no clue. I was hoping there would be ICO guidance or some legal precedence I could direct them towards.
Honestly the number of companies who are incapable of correctly reporting to credit agencies and who totally ignore ICO and DPA rules is utterly staggering. There needs to be some campaign around this as the ICO are toothless when it comes to these issues.
Alex says
Good news! I got a reply from the administrators.
“Good Morning/Good afternoon,
Thank you for your recent correspondence.
If you have recently made a claim in the Scheme of arrangement we will shortly be assessing all of your past lending and, aim to let you know any upheld redress amounts by the end of 2020. This is because we must consider all claims before being able to calculate the final redress payment. If we don’t agree with your claim, you will be able to ask an independent third-party adjudicator to consider your case further.
If it is decided that your loan was irresponsibly lent and your claim is upheld, any customers who hold an outstanding debt purchased account (with companies such as PRAC or Asset Collections) will be given the opportunity to off-set your redress claim from your current outstanding balance and have your credit file deleted at the end of the Scheme. ICL are currently liaising with a number of companies we have sold debt to in the past, and will arrange for your balance, if you choose to, be deducted at 100p/£.
Should you have any further queries please give us a call on 0203 901 7440.”
Please feel free to use this if it’s helpful, I can also forward you the email if you want.
Sara (Debt Camel) says
that is very good news.
Clare Webster says
Yes please
Alex says
Hi,
ICL removed mine PDUK loans from clear score. I raised the dispute in transunion and Experian. As I remember they removed from Equifax only . why?
Alexxx says
I did the same. they removed my PDUK from Equifax and I raised disputes in transunion and Experian. gona see what will happens
mark says
Hi,
I am still owing around £1500 to paydayuk now TheMoneyShop
I have not received any information regarding the redress when i filled in the form last november/december
do i need to still pay the £1500 as i am currently paying £50 a month. can i ask transunion to remove this from my credit rating and tell the moneyshop i wont pay the rest?
original amount was £2k loan – slipped on payments went up to £3k due to financial difficulties – managed to pay of half of that £1500 and bring it down to £1500
Sara (Debt Camel) says
Was this your first loan from them?
re your credit rating – you need to wait until the Money Shap has decided if it will uphold your complaint.
Basil says
Hi Mark
If you already have a default, then the damage is done. You might as well try and pay back as little as possible now and put your money to work on other debts etc. I’d stop paying immediately, tell them you’re suspending payment until you get a full decision from TMS. I told BW I wasn’t paying a thing until the end of the redress, they sent one threatening letter and nothing more – that was 12 months ago now.
mark says
I am just worried it will impact my credit rating – i have done well this last year to get it back up. its with Instant cash loans
loan defaulted on 2016 august – so i have 15 more months till it is wiped
ill ring and say i want the loan removed – as its in redress have not heard anything . if they dont remove it out of goodwill i’ll ask to suspend payments until they make a decision!
I just dont want it to go to a debt collection agency or ccj
Jason says
i had form about redress when was at [old address] but my adress has changed and my email has to so i dont no if i am getting something back and if so will into go into the bank just want to no thats all and do i have to give them my new email adress.
Sara (Debt Camel) says
you need to tell them about your new email address otherwise you won’t know what is happening.