A first payment of 4.31p in the £ was paid in May/June 2021.
A second, much smaller payment of 0.65p in the £ is being paid on 14 or 18 January 2022.
If you do not receive this second payment, see below for what to do.
Background to the Scheme
This “Scheme of Arrangement” covers borrowers from the ICL brand names, Money Shop, Payday UK and Payday Express, who were given unaffordable loans.
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 wqs facing escalating costs and it was 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. See What is a Scheme? for more details. ICL is using this to limit the amount it has to pay out in refunds on unaffordable lending.
The Scheme was approved by creditors in September and by the Court on 8 October 2019.
4.3% paid in May & June 2021
A claims page was published and all Claims had to be in by April 9 2020.
The Money Shop home page said:
- We have calculated the final dividend amount and you will be receiving 4.31p per £1.
- Where you provided us your bank details we will commence making payments from 24 May 2021.
These payments were made by BACS. People will be paid in batches, once or twice each week through to the end of June:
- We are unable to let you know the exact date of your payment.
- You will receive an email before we make your payment with your calculation and cash payment amount.
- If you did not provide us with bank account details, we have sent you a cheque.
The following details come from the March 2021 Scheme report:
- 182,566 Claims were received;
- the uphold rate was about 85%;
- the total compensation people should have got was c. £340 million – now people will only get a tiny amount of that back;
- it is now too late to submit a Claim.
No tax is deducted from the amount paid so there is nothing to reclaim.
Second, smaller payment to be paid in January 2022
After the first payment ICL was still receiving some money eg from a VAT recovery claim. This is being distributed to customers who had complaints upheld in the Scheme.
This will be 0.65p in the £. That is 0.0065% of the total redress that was calculated in your case.
This second payment will be much smaller than the first. If you got £100 on May 2021, you will get about £15 extra now in January 2022.
Customers were told by email about this on 12 January. The payments will be made on the 14 and 18 of January – your email says which date you should be paid.
Only bank transfers are being made – cheques will not be sent for this.
If you do not receive this payment in your bank account on the date you were told you MUST immediately tell ICL by 20 January:
- email email@example.com with “No payment received” as the subject of the email
- give your claim reference number (it was in your email) and your name
- give your bank account details – Sort code and Account number.
This second payment will be the final distribution. ICL will be liquidated – the company will no longer exist.
Was your ICL debt sold to PRAC/BW Legal?
Where you still owe ICL a balance on the last loan, this has been “set off” against your refund.
- you should have had a refund of £2500 and you still owed £1000
- then your balance is cleared, leaving you now being owed a refund of £1500
- you then get 4.3% of the £1500
If your last loan was sold to a debt collector, in most cases ICL has arranged for you to still have this set off.
The exception is if your loan was sold to PRAC/BW Legal. Here you have been left owing the debt to PRAC/BW Legal and were only paid 4.3% on the redress ICL calculated.
PRAC/BW Legal is offering to reduce some customers’ balances, but see No set off in a Scheme/Administration when debt had been sold? for how you can complain and ask them to write off your whole balance.
5% in all – that is a very poor outcome for customers
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 about 5% (4.3p + 0.65p) is a dismal outcome for customers.
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.
Updated January 2022