Instant Cash Loans (ICL) is sending emails to the 2.6 million previous customers of Money Shop, Payday UK or Payday Express headed:
INVITATION TO CLAIM: SCHEME OF ARRANGEMENT IN RELATION TO INSTANT CASH LOANS LIMITED
These are being sent over the next few days, so don’t worry if yours hasn’t arrived yet.
The email explains that the Scheme ICL had proposed is now live. It says:
If we lent to you irresponsibly or your borrowing was unaffordable or unsustainable, it is possible that the interest or other charges you paid were unfair. So if you are concerned about any of the loans we provided, we’re inviting you to submit a claim.
That may sound complicated, but it’s very easy to send in your claim:
- go to the Claims Page and enter the eight-character Reference Code at the top of your email.
- that sets up your account. You can then see the contact information ICL have for you and correct it if necessary.
- then press ‘Submit Claim’.
- that’s all! You don’t have to give any details about your loans or why you think they were unaffordable.
- Don’t go through a claims firm or they will take a chunk of your refund just for doing this.
Claims must be submitted by 9 April 2020.
ICL will then:
- assess every Claim and calculate the compensation. All your loans will be considered for compensation, including those over 6 years.
- when all Claims have been assessed, ICL will work out what percentage of the compensation will be paid. This will depend on how many people make Claims, see below.
- ICL expects to make payouts under the Scheme by the end of 2020.
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.
Who can get refunds & and how much might they get?
The regulator says that a loan is affordable if you can repay it without hardship and without borrowing again. Millions of payday loans were unaffordable. And that includes a lot of the loans from the Money Shop, Payday UK and Payday Express.
The more loans you had, or the more you rolled over a loan, the more likely it is that your loans were unaffordable.
If you were given a loan which was unaffordable, you can claim a refund of the interest you paid.
On August 14, ICL said that it expected to have enough money to pay out nearly 80p in the pound. But 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.
These numbers can never be exact. If the extra customers who apply all have a lot of loans over 6 years, the final figure could be lower. But if the extra customers only have a few recent loans, the final figure could be higher. And, of course, more customers could apply than ICL’s latest guess.
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? So I am pleased ICL has provided better estimates. I can’t tell how realistic they are.
FAQs about the Scheme (updated 18 October)
I will be keeping these up to date when more becomes clear!
“Do I have to submit a Claim as I have already complained?”
No you don’t if you had an open complaint with one of these lenders when the Scheme was proposed OR you had an open complaint at the Financial Ombudsman. Here your complaint will go automatically into the Scheme without you having to submit it again.
Yes you do if ICL rejected your complaint or you had rejected ICL’s offer and you did not have an open complaint at the Ombudsman. Here you have to submit a Claim now.
“I already had a refund but it didn’t cover loans over 6 years. Can I claim for them?”
Yes, you can put in a Claim if you had a settlement from ICL previously but you think more loans should have been included.
“What if I don’t get a letter or email from ICL – can I still make a Claim?
Yes – you will need to provide some details (address, postcode) to register your account, then you can Claim.
But first, check your spam folder! The email with your reference code could be in there, which makes registering even quicker.
“Can I send a complaint to the Financial Ombudsman?”
No. This would be a waste of everyone’s time as FOS is not going to look at the complaint.
If you don’t like the decision ICL makes about your Claim, you will be told how it can be looked at by the Scheme Adjudicator instead – this is not an adjudicator at FOS.
If you think you have a very unusual situation, leave a comment below this article and I will try to suggest what you can do.
“Will loans be deleted from my credit record?”
ICL will be correcting people’s credit records. They may just remove negative marks, but it’s likely they will delete all loans which their Claims Assessment decides were unaffordable.
“I am still paying a debt collector for one of these loans, what should I do?
This is complicated – I will come back and update this later.
“I’ve changed my bank account – what should I do?”
When ICL informs ICL will give details of this later.
“How much are we likely to get paid?”
See the section Who will be able to get refunds & and how much might they get? above for ICL’s thoughts on this. The number won’t be known until after all the claims have been submitted and assessed.
“Is there anywhere else we can get the rest of our compensation from?”
No. 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.
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 October 2019