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Morses considers Scheme to cut refunds to customers [July 2022]

UPDATE – in November 2023 the Morses Scheme failed – see Morses Club goes under – in administration  for details

Comments are now closed on this old article.

Britain’s largest doorstep lender, Morses Club, announced in July 2022 that it was considering a plan to reduce its liability to pay compensation to customers mis-sold unaffordable loans.

The announcement  of a possible Scheme of Arrangement would cap the amount of money Morses has to pay in refunds.

It wants a Scheme because it is facing increasing numbers of affordability complaints. It says:

A key objective of a potential Scheme would be to treat all customers equitably and settle eligible Redress Claims over a period to be defined. The Directors believe that a successful Scheme would provide more certainty in respect of the total liability for Redress Claims and help to secure the longer-term stability of the Company…

Whilst the Directors consider that Morses Club has adequate liquidity for the immediate future, they believe that without a potential Scheme, the level of Redress Claims could jeopardise the Group’s future.

Morses Club currently has 144,000 customers. It became the largest doorstep lender after Provident exited the market last year.

Background – what are doorstep loans?

Morses agents visit customers in their homes to set up loans. Some customers pay the loan installments to their agent every week, others pay through the app. Doorstep lending is also known as home-collected credit.

This is a very expensive business model. Even at Morses very high interest rates – 498% APR on a 35 week loan and 343% APR on a one year loan – it is only profitable when a customer borrows more than once.

Research for the FCA has shown how repeat borrowing in the home collected credit market is very frequent:

Some of the home collected credit customers in the qualitative research had been using this form of credit for so long they couldn’t accurately remember when they started. One customer now in his late sixties had started using home collected credit after he was forced to give up work following a major heart attack at 45.

The FCA says:

We have significant concerns that repeat borrowing could be a strong indicator of a pattern of dependency on high-cost credit and levels of debt that are harmful to the customer.

Morses is getting a lot of affordability complaints

A loan is only affordable when it can be repaid and still allow the customer to pay their other debts, bills and living expenses, without having to borrow again. When someone has had several doorstep loans, this is very often a sign that they are unaffordable.

Morses is currently losing 67% of affordability complaints at the Financial Ombudsman. Here is one recent FOS decision where the Ombudsman decided that loans 3 and 4 were not affordable and Morses should refund the interest on these loans:

Mr J had now been borrowing for 15 months without a break and the amounts he borrowed had generally increased. This, to me, points to a sustained and increasing need for this type of credit.

Morses is facing increasing numbers of complaints from claims companies. In February it said:

The cost base of the HCC division has been impacted in recent days by a rapid increase in claim volumes submitted via claims management companies. Given the scale of these complaints, it is anticipated that costs will increase and impact adjusted profit before tax for the current financial year, ending 26 February 2022. 

At the same time, it announced that its Chief Executive, Paul Smith was leaving. As the Investors Chronicle reported:

on Thursday 17 February, Smith committed a fatal error of judgement. Without telling anyone in Morses Club, he sold shares worth almost £200,000.

The company learned about this the following day, and after what must have been a frantic weekend, Morses issued a profit warning: the cost of checking or paying claims, it said, would reduce profits to 20 to 30 per cent below consensus.

Oh, and by the way, Smith had “stepped down with immediate effect”. He wasn’t thanked, which is often the code for being sacked, and the accompanying media release revealed his share sale.

How Morses customers would lose out in a Scheme

Schemes are set up to cap the amount a firm has to pay out to a group of creditors. In this case, the creditors are Morses customers who were given unaffordable loans, as they could claim a refund of the interest they paid.

These harm customers in three ways.

Customers normally only get a percentage of the calculated compensation

Some jargon:

  • the amount people get is described as the pence they are paid for every pound they should have had. This is the same as a %. So if you are paid 30p in the £ that means you are getting 30% of your correct refund.
  • refunds and compensation are often called redress,

Looking at recent high cost credit Schemes:

  • the Money Shop‘s paid a bit over 5p in the £ – after originally saying it expected to pay about 81p in the £;
  • Provident’s Scheme is paying 4.25p in the £ – when customers voted, many thought that would get 10%;
  • Amigo Scheme in progress said it may pay 41p in the £ – though in 2023 that was cut to only 17p

Today’s announcement says Morses is making an additional provision of £45m in its accounts for complaints. This isn’t the amount Morses will put into any Scheme. It is impossible to guess at the moment what percentage any Morses Scheme may pay out.

Many customers don’t hear about the Scheme in time to claim

There is a strict time limit on making a Claim – typically 6 months.

Emails about the Scheme may go to an old email address. Or they may be incorrectly identified as spam so the customer never sees them. Letters may go to an old address.

If someone doesn’t find out in time to claim, there is no way for them to make a complaint. The Financial Ombudsman won’t be able to consider one. And you can’t even go to court. A Scheme changes your legal rights so you literally have no way to claim after the Scheme deadline is reached.

Morses will decide which loans are unaffordable in a Scheme

If Morses only uphold a small number of loans, a borrower may have had more upheld by the Financial Ombudsman.

In a recent complaint, Morses only upheld loans 5-9. The first 4 loans were in order £200, £240, £400 and £700. It’s likely that the Financial Ombudsman would have said that the much larger loan 4 was also unaffordable.

Many people have been left very unhappy with apparently random decisions made by Provident in its Scheme.  If they want to appeal, they are asked to produce evidence. Provident failed to explain why loans were rejected so it was difficult for the customer to argue against it.

Where there is repeat lending, the Financial Ombudsman doesn’t normally ask a borrower to produce a lot of evidence. The repeat lending itself shows that the customer has become dependent on the loans.  This is frequently the case with doorstep lending such as Provident’s and will also apply to Morses.

Schemes have an appeal process. But Provident made this so difficult and their payout is so low that many people gave up.

What happens to current Morses complaints?

Today’s announcement by Morses says:

The Company has provided the FCA with its proposals and is engaging with them regarding a potential Scheme and its future business model. 

Importantly it does not say that Morses has asked the FCA to be able to pause complaint handling while a Scheme is set up – the legal jargon for that is called a moratorium.

With no moratorium in place, Morses will have to carry on assessing complaints and the Financial Ombudsman will carry on taking complaints and deciding them. So current complaints should be OK at the moment.

It sounds as if this Scheme is at a very early stage, and getting it approved may be lengthy:

The Company has also taken steps to appoint an independent Chairperson to set up a Customer Committee to represent eligible customers and assist the Company in developing any potential Scheme. Details of any potential Scheme would be announced in due course. The Scheme would be subject to the approval of the requisite majority of affected customers (i.e. those customers who received loans during the period to be covered by any Scheme) and, thereafter, the Court. 

I don’t think the FCA should allow a complaints moratorium for a long period. It would leave customers in limbo, unable to progress valid claims. For Amigo this went on for more than 18 months before a Scheme started.

Comments

  1. Michael QUICK says

    THey created situation (greed) they pay that is the only right thing to do, no more corrupt judgments against the people, they owe they pay and then some. senction ownets and their property to comply no let outs we pay they pay. end of..

  2. Kim says

    Iv contacted morses 3 times and been ignored everytime. I used your template first time but since then just emailed.

  3. Mick says

    More and more of these companies are treating their customers with complete contempt by doing this. Then being able to walk scot free and able to continue making more money and profits for shareholders. This is a disgrace and the government seems to think this is okay.

  4. Anonymous says

    So my complaint is with them for the 35 loans I had since 2014
    Due to here there final decision on 1st Aug will this still happen and if I not happy can I still take to obudsm an,are they likely to get this scheme approved quickly or do I still have chance of a proper redress figure

    • Sara (Debt Camel) says

      So far as I know they are carrying on with complaint handling. And yes, you will able to send a complaint to FOS on 1st August.

      They are talking about setting up a customer committee to look at a possible Scheme. From the point in July 2021 where Amigo wrote to customers asking if they would like to be on its customer committer to the scheme being approved in May 2022 was 10 months. So not speedy!

  5. Michael QUICK says

    The government a complete disgrace and has been since they had high salaries at our expence let alone too many MPs for a small island manipulted to gain votes over the years. – scandal.

  7. Marie says

    Hi Sara
    I have a complaint in with them at the moment. My deadline date of 8 weeks for the final response is next week.
    Is it realistic to believe I will receive the full amount of my redress, if I am successful, taking into consideration that they take 28 days to pay out?
    Thanks,
    Marie

    • Sara (Debt Camel) says

      At the moment they appear to be carrying on with normal complaint handling. It is certainly possible you could get the full redress. I can’t say how likely this is,

  9. Timbo says

    Is there an email address to send complaints to Morses? Can only find a phone number or postal address. Thanks

  10. Francis mcd says

    My wife and I have had several loans with morses, rolled over. I owe about £150, wife owes about 2-3 grand. Still paying them. Should we stop paying them? Will they go into administration?

    • Sara (Debt Camel) says

      if you have each had several loans, I suggest you both send them an affordability complaint now.
      Are the loan repayments affordable for you – that is can you repay and not be left so short you will have to borrow more money, from Morses, or elsewhere, or get behind with bills?

      • Francismcd says

        I’m paying 25 a week off. My wife pays £105 a week. Can afford it ok at min from benefits,but should we stop paying? If they go into administration will we be chased for the money if we dont pay?

    • Sara (Debt Camel) says

      There is no sign at the moment that they will go into administration.
      I suggest you both make complaints and see what Morses reply.

      £105 is a lot to pay if you are on benefits. With energy bills set to go up purther, That amy well be unaffordable. You must not borrow more money elsewhere to repay Morses. Or egt behind with important bills.
      Can I suggest your wife talks to National Debtline on 0808 808 4000 about what she should do? This is in addition to making a complaint, not an alternative to it. It may be she needs to ask for a pyment arrangement with Morses so she can may off the loan at a lower, more affordable rate. If she then wins an affordability complaint, interest is removed and it will be repaid even sooner.

  11. Amy says

    I used to work for morses and last year I sent them an affordability complaint had 49 loans in total they sent me all of my loan letters. then there final reponse was basically that it was fraud i had committed and knew what I was doing so that was the end of it. not that I ever issued my own loans of course the pressure of targets and not being paid my manager used to say so I ended up with loads that I couldn’t afford so I have just left it at that all cleared up now thank god absolute terrible company

  13. Ashley Clark says

    I have been told that I will receive a response by end of play 15th Aug 2022. Do you think I won’t be paid anything if it is upheld as I read it was only new claims not ones that have already been done

      • Ashley Clark says

        Got my reply back today and said they were not upholding so sending to ombudsman.

        But had £30 off someone today with ref FSBC then loads of numbers. Don’t know where it has come from

  14. Keely says

    My complaint got upheld and I’m currently on day 12 waiting for payment, does this mean there is a chance I will not receive the money?

    • Sara (Debt Camel) says

      There is a chance.
      But Morses statement yesterday said “Morses Club has now taken steps to pause the processing of all new redress claims for unaffordable lending with immediate effect.” That doesn’t sound like it means claims currently in progress… let alone ones that have actually been agreed.

      Was your complaint upheld by Morses directly, if so how long is it since you complained?

      • Keely says

        Yeah it was with morses directly, complained 6th June final response 1st august, they upheld they upheld 17 loans out of 42 I accepted just incase the went into administration

  15. Jackie says

    I put a complaint in on 20th of May, I received a letter to say my complaint was being investigated. I emailed again last week and said if I didn’t hear from them soon I was going to the Ombudsman. I got an email by return to ask to phone them. I phoned and was told my final outcome letter was sent to me on the 19th of July which I never received. The woman said she would get a new copy sent out to me. I received it this morning. I’m quite happy with what they’ve offered although 5 loans weren’t upheld. I’ve posted the form back recorded mail. They should get it back Monday. Do you think I’ll get paid out?

      • Jackie says

        I phoned this morning to tell them I was accepting the offer. Lady took my details and said payment will be made within 28 days. Will wait and see.

  16. Anonymous says

    Hi Sara
    Like above I received final offer on 1 aug to which I accepted redress for 17 loans out 35 and was told payment would be up to 28 days.
    Because this was accepted before this new statement on suspending new claims should I be right in thinking that my acceptance means they are legally obliged to forful my refund

    • Sara (Debt Camel) says

      I hope your refund will be paid soon and in full.
      You do not have a “legal right” to this in every circumstance – if they went into administration you would be unlikely to get a it paid in full.

    • Anonymous says

      I phoned them today to see where stand was told because before 11august at 7 am then everything should progress as settled n be paid as scheduled,so hopefully that happens

  17. Anonymous says

    Just spoke with them n they said be paid on 31aug as that is the 28 days for me since accepted offer hope that helps

    • Jackie says

      I’ve still got 19 days to go till my 28 days are up. Would’ve been earlier but my original letter went missing in the post. 😀

    • Jackie says

      No, nothing yet. I phoned on Friday and was told my payment would be in the bank by the 13th. Here’s hoping.

  21. TYB says

    I complained to Morse over a year ago, went to ombudsmen, adjudicator. Ombudsmen overturned adjudicator and upheld Sept 1st. Morse have til Sept 16th.

    Is it likely I will be paid?

    • Sara (Debt Camel) says

      At the moment I would say this is likely. There is no indication that Morses are not paying out on Ombudsman Final Decisions. Even if the FCA does agree to a moratorium, I would hope existing FOS Final decisions will be paid immediately.

  23. Tania Cunningham says

    Hello, I have just had my final response from Morses, they are not upholding any of the 14 loans I had from them, I habe forwarded to Ombudsman any idea how long this will take? I am shocked that not one of these loans where upheld as quite a few overlapped.

  24. Kelly says

    Hi all,

    Got my final response letter today and accepted it 🙌 started my claim 8 weeks ago and I am now being paid out. I used resolver as my template easy to use and understand, hope all that waiting for a response get one soon x

      • Kelly says

        Hi Sara,

        I was very surprised too and the amount was far more than I thought it would be 😳 now just waiting the 28 days for payment fingers crossed 🤞 they will pay out x

        • Lyn says

          Hi Kelly,
          I like you are on the 28 day countdown but reading the comment by Clare further down it is worrying as to whether we will receive it.
          Lyn

          • Kelly says

            Hi Lyn,

            My 28 days will be up on the 25th October fingers crossed it comes through 😀😀

        • Lyn says

          Hi Kelly, did you have an active account with Morses as I have been checking my account each day and today it is showing a nil balance as this was part of my offer to clear it so guessing things are progressing. Hope all of our payments are still on target but I am very glad not to be paying out each week. Take care.

        • Lyn says

          Hi Kelly, sorry could not find a reply section on your last post but that is a relief to hear that it will be paid out on the 25th.
          Think we will all be relieved to have it sorted. Take care.

        • Lyn says

          Hi Kelly, wondering what the next ten days will bring? Lets hope it all works out for everyone. Lyn x

          • TYB says

            Mine was due 24th, sent numerous complaints, emailed CEO Friday, just checked and mine is in my bank!

          • Kelly says

            Hi Lyn

            Just this minute been paid money is in the bank 😁 so happy fingers crossed yours is put in early xx

    • Lyn says

      Hi Kelly, have only just seen this, so pleased for you, one less worry in these chaotic times we are in! Not received mine as yet but your news has given me hope. Take care xx

        • Lyn says

          Hi Kelly, nothing as yet, maybe later today or Monday. Just would be nice to be sorted out.
          Take care xx

        • Lyn says

          Hi Kelly, bad news I am afraid, just had an email to say payment wont be for a further 4 weeks. ☹️
          Not feeling very hopeful. Take care Lyn x

          • Kelly says

            Awwww babes so sorry to hear this 😢 I think you should give the ceo an email and rell him your being messed about. I got an email today saying I would be paid out on the 23rd but I have already had it 🙄 let me know what happens xx

          • Kelly says

            Hi Lyn

            Just checked my emails and I have had an email saying sorry but payment will now be 23/11/22 but I have already been paid out so strange. I definitely think you should email the ceo hun, I think they are just dragging it out now xx

        • Lyn says

          Hi Kelly, thank you so much for your concern and support I really appreciate it.
          I have just emailed the Gary Marshall email address hope that is the right one.
          I know you shouldnt expect things until you actually have them but it would help me out so much to get straight at the moment plus a bit to have by me so it has really made me feel down.
          Will keep you updated. Take care xx

        • Lyn says

          Hi Kelly,
          Received payment this evening after a call this morning from a manager. Guessing the email worked!
          So relieved and grateful to get straight with some left over. Good luck to everyone else waiting.
          Lyn

        • Lyn says

          Thank you Kelly xx

          Thank you also to Sara, without this website I would never probably have known about redress payments.

    • Lyn says

      Hi Kelly, that is great news to know you have received it safely. Makes me feel more hopeful of receiving mine now.
      Take care xx

  25. Karen says

    Hi, my complaint was upheld and my 28 days is tomorrow, morses emailed me that unfortunately payment is delayed and I will receive it by 10 October, any advice would be welcome please
    Thank you
    Karen

  26. graham russell says

    hi sara
    i made my claim nearly 4 months ago and just had letter from lawyer saying they have applied for scheme of arrangement had no offers in the 8 week term only other letter i had was the amount they owe me

    thanks graham

    • Sara (Debt Camel) says

      send the complaint immediately to the Ombudsman. It is a pity you did not do this 2 months ago when it got to 8 weeks.

  27. Clare says

    Hi, does anyone have the telephone number for complaints? I was due redress by COB yesterday and nothing called customer services who said she will contact the complaints department but it could take up to 8 weeks for a response

    • Lyn says

      Try 03300450717. The number in my redress letter went to customer services so the lady gave me a different number (as quoted) but I had to wait 50 mins for someone to answer. Hope it is sorted for you.

      • Clare says

        I managed to speak to someone in complaints they said they sent a letter out which I haven’t received saying there is a delay in payment and expect it by 24th oct, I am waiting on a managers call back but won’t hold my breath

          • Clare Furness says

            Hi Lynn, no reason still waiting on a managers call back they are saying payment on 24th Oct

        • Lyn says

          So sorry, really hope it is sorted for you very soon. Mine is due on the 25th, not feeling very confident about it all.
          Take care.

          • Kelly says

            Hi Lyn
            I got worried after reading some of these comments so phoned morse 😫 they assured me the payment will be paid out on the 25th 🤞🤞 and it will usually show up in the afternoon early evening 😀

  28. Clare says

    A bit of good news to share after Emails getting ignored and requests for managers call backs not being made as promised I got fed up and Emailed the CEO last night, might be a coincidence but I got a call off a manager this morning to say they will process it today and it’s just gone in my account now.

  29. Kim says

    I’m really pleased that some people are getting somewhere as I’m still in limbo…. I’d emailed morses 4 times since July, got a copy of all loans end of august, emailed Ricky and got no response, took it to ombudsman who asked for a copy of my email to them and that was 9 days ago and not heard from them since either 🤷‍♀️

  31. Kim says

    Iv just received this from ombudsman and very confused as I thought it was them that dealt with it after 8wks?

    Thanks for getting in touch with us. We’ve contacted Morses Club PLC to tell them about your complaint – so they have a chance to put things right for you first.

    Morses Club PLC should get in touch with you soon. If you need to get in touch with them, their contact details are:

    Morses Club PLC
    Kingston House
    Centre 27 Business Park
    Woodhead Road
    Birstall
    Batley West Yorkshire
    WF17 9TD

    Next steps

    Morses Club PLC should give you their final response to your complaint – in writing – within eight weeks at the most.

    At this stage, Morses Club PLC should also let you know that you’ve six months from the date of their response to come back to us if you’re not happy.

    We won’t take any further action unless we hear from you again – and I hope Morses Club PLC can resolve things for you.

      • Kim says

        July but got confirmation on the 19th august sayin they had logged the complaint on 11th august at 7.00

        • Sara (Debt Camel) says

          so 8 weeks has passed from the 11 August – tell FOS you have confirmation they had your complaint at that point but they haven’t responded to it so you want FOS to investigate it.

  32. Tracey kenny says

    Morses are saying that they have no record of my loans with them it took them out as Shopacheck is there anything I can do ??

  33. Thomas stewart says

    I was supposed to receive my offer today,got an email last week,saying it would be delayed till 9th of November. Not holding my breath.

  34. Kim says

    I got an email from ombudsman today saying my complaint has been logged and iv just got to wait for a case handler to be assigned to it and should hear within next 4 months

  36. Jo says

    Hi I just made a complaint to morses wonder if I will even hear from them going by everyone else’s complaints ha ha 6loans in total fingers crossed

  37. Kim says

    Iv had correspondence from them a couple of times over past couple of weeks saying there no longer dealing with complaints since august 11th which I’m not happy about as I used there complaint form 3 times before end of July and was ignored until august after they stopped dealing with complaints so my complaint was logged then

  38. Jo says

    I filed an unaffordable lending claim with morses 5days ago I just received an email to say that r looking at my claim and will be in touch with me shortly with the next steps , wonder how long it will take them to now respond xx

  39. Jo says

    Sara r they known not to reply in 8weeks , I have had a number of unaffordable lending claims upheld with different companies do they normally follow the same like investigations

    • Sara (Debt Camel) says

      No. They are routinely taking much longer and some people never get a reply, just delaying emails. Do not give them any more time, send your case to FOS.

  40. Kim says

    I don’t understand what is going on with morses, I was told they were no longer dealing with claims. Sara do you know of any update please?

    • Sara (Debt Camel) says

      No, that is why you need to send the complaint to the Ombudsman immediately after 8 weeks of Morses sitting on it. the Ombudsman is still looking at morses claims

  41. Chris says

    I made an affordability claim against them in August and contacted them so many times. All I want is the negative information removed from my credit file, as it’s stopping me getting a mortgage. It’s clear they are in the wrong over the lending.

  42. Jo says

    Just got an email from morses to say they r looking to enter into a scheme so looks like a long road ahead with this lot

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