Provident’s Scheme of Arrangement has been approved in court. The court hearing was on 30 July 2021 and the decision has now been given.
The Scheme was proposed because Provident could not afford to carry on paying full refunds to customers winning affordability complaints. The Financial Ombudsman was upholding 75% of complaints against Provident who often did not make proper affordability checks.
The FCA, Provident’s regulator, said it did not approve of the Scheme. But as Provident has stopped providing doorstep loans, the FCA did not object to the Scheme in court.
The Scheme starts officially on 5 August 2021 and customers can now make a claim for a refund.
This article covers what you need to know about making a claim to the Provident Scheme.
Only £50million is available in the Scheme, so you won’t get a full refund. But you may still get hundreds of pounds and your credit record cleaned.
Background to the Scheme
My previous article Provident proposes a Scheme to cap refunds gave the background to the Scheme – the increasing numbers of affordability complaints, the changing legal and regulatory environment, as well as the pandemic.
- What is a Scheme of Arrangement and why do lenders want one? for a general view of Schemes of Arrangement.
- Doorstep lending refunds – that template can still be used for other doorstep lenders such as Morses, Mutual and Loans at Home. But all Provident complaints now have to be made through the Scheme instead.
- Provident Scheme – the voting and approval process explained how people could vote on the proposed Provident Scheme and the way it was approved.
Which loans are covered by the Scheme?
More than 4 million people were given a loan by Provident that comes under the Scheme.
These loans were given between 6 April 2007 and 17 December 2020.
The loans came from four different brands:
- Provident – often called “doorstep loans” or “home credit”;
- Satsuma payday loans;
- Greenwood – another doorstep loan brand that hasn’t been used since 2014;
- Glo – a very small guarantor loan brand.
In this article, I talk about “Provident loans” for short – but it also applies to loans from the other brands.
Provident also owns the Vanquis and Moneybarn brands – these are NOT included in the Scheme. If you have an affordability complaint about them, you can still make a normal affordability complaint and get a full refund.
If your loans were “unaffordable” send a claim to the Scheme
The definition of “unaffordable”
A loan is only “affordable” if you could repay it on time and still be able to pay your other debts, bills and living expenses.
You may have paid the loan on time, but it may still have been unaffordable.
If paying Provident left you so short of money you had to borrow more or you got behind with bills then it was “unaffordable”.
If you had several loans without a break between them, then Provident should have realised you were trapped in a cycle of borrowing and that these expensive loans were not affordable. Even a single loan can be unaffordable if it is large.
How to send claim to the Scheme
If you voted on the Scheme, that will have submitted a claim and you don’t need to do anything.
If you didn’t vote, you can now make a claim. There is only a 6 month window to make any claims it ends at the end of February 20200. It’s best not to leave it until the end in case you have problems submitting a claim!
To make a claim, you first have to set up an account in the Scheme Portal.
This needs your Scheme ID number – that is on emails and letters you may have been sent. Your name has to be spelled exactly the way Provident has on their records for you, shown on the emails or letters. If you have got married, or changed your name, or they have the wrong spelling, enter it the way their records show.
For most people this will be very simple. But if weren’t sent a letter or email, or can’t find them, phone Provident on 0800 056 8936.
Also phone that number of you do know your Scheme ID but the page won’t accept it.
Once you have an account set up, you log in and submit the claim.
Did you have two accounts?
If you think you may have 2 accounts with Provident – perhaps you moved, or changed your email, or some other reason – tell Provident about this by emailing email@example.com. If you don’t get a helpful reply in a couple of weeks, phone them up and ask.
This is very important. You want a claim submitted for both accounts. And you want both your accounts to be looked at as a single account, not 2 separate ones, as this may mean you get a larger refund.
You may be asked for “evidence”
You don’t need details of your loans to make a claim.
Provident is asking people to supply details of any CCJs or defaults. If these were in the last 6 years, they will show on your current credit reports. See How to get free credit reports for details – the statutory credit reports are often the easiest reports to download so you can send them to Provident.
If they were older than that, you may have something else which shows them – old letters, emails?
But don’t worry if you don’t have these. Provident will still consider your claim without them. If you only had a few loans, extra evidence can be useful. But if you kept taking new loans, that by itself suggests they were not affordable.
Do you have to make a claim if you have already sent in a complaint?
There are a lot of different situations here. It depends on when you made the complaint and what happened to it.
Provident has produced a flowchart that looks at the different cases. Some complaints will be automatically registered with the Scheme and some you have to submit a claim form. If you sent in a complaint after 15 March 2021 you definitely have to submit a claim to the Scheme.
I suggest that it is better to be safe than sorry here. Register an account with the portal and try to submit a claim.
Not sure if you can claim?
If you had one of these loans you can make a claim. It doesn’t matter if you paid the loan on time, if you still have a loan, if you defaulted, or if the loan was sold to a debt collector.
You can still make a new claim if you had complained before. Provident rejected too many complaints and only made low offers on others. You can complain again if your claim was rejected or you accepted a low refund or your case was at FOS.
Provident has set up a page with FAQs about the Scheme. That may answer some questions. If you have others, you can ask them in the comments at the bottom of this page.
How refunds are calculated
Is your complaint upheld?
The first stage in getting a refund is for Provident to decide whether to uphold your complaint. The steps in doing this are
- Provident will decide which loans are “unaffordable”. They will use the details of your loans and other information they have in their records, plus any evidence you have sent in. The more loans you had, the more likely it is that some loans will be unaffordable.
Often Provident will decide that the later loans were unaffordable as they should not have continued to lend to you. So if you had 7 loans, a decision may be that loans 4-7 were unaffordable.
If the first loans were very large, or you had recent CCJs, all the loans may be decided to be unaffordable.
- Provident will calculate the interest paid on the unaffordable loans. The interest you paid is the difference between what you borrowed and what you paid, so if you paid £420 on a £250 loan, that is £170 in interest.
- Provident will add 8% simple interest to the total interest on the unaffordable loans to give the total redress. This is 8% per year since the interest was paid. So if your loans were in 2011, you will have about 10 years of 8% interest added. If your loans were in 2019, you will only have 2 years of 8% interest added.
- You will be told which loans were unaffordable and what the total redress is. If you think more loans were unaffordable, you can appeal this. The appeal will go to an independent expert appointed in the Scheme, not the Financial Ombudsman. In other Schemes and Administrations, people have won appeals.
Keep an eye on your claim
When you have made a claim, you may not hear anything for months.
But it is a good idea to check back every month or so though. They may have sent you an email that you missed. You need to know so you can decide if you want to appeal.
You can log into the portal. Or look at the comments on this page and see if other people have heard anything.
How much will you be paid?
The next stage is for Provident to divide up the £50 million in the Scheme between the people who have had their complaints upheld.
You will be paid a percentage of your total redress number, not all of it.
Provident thinks people may get paid 5-10% of the calculated amount. But this will depend on how many people claim and how many loans are refunded.
This percentage calculation will be made after all complaints and appeals have been decided. It will probably be mid 2022 when you will be told how what you will get and the money will be paid.
Credit records will be cleaned
For upheld loans, any defaults or missed payments will be removed from your credit record.
In other schemes and Administrations, some people say getting rid of a default was the most important result for them. Not the cash refund!
Do you still have a loan?
Refunds for current loans
If you still owe a balance, if that loan is decided to be unaffordable the interest will be removed, so you only repay what you borrowed.
- Say you borrowed £1000, have repaid £600 and still owe a balance of £1200. If this loan is unaffordable, the interest will be removed so your balance will drop to £400.
- When you have already paid more than the amount you borrowed, the balance will be wiped and you will get a percentage of the interest you paid back.
If your loan was sold to a debt collector, Provident will try to buy back the loan and settle it within the Scheme. In the recent Money Shop Scheme, this was possible in most cases – there was only one difficult debt collector and I don’t think Provident used them.
Do you have to keep paying a loan?
If you win your claim to the Scheme, your cash refund may only be paid at a small percentage. But ALL the payments you have made to a loan since the Scheme started are refunded in full.
So if you can afford the repayments, carrying on with them is the easy option and you won’t lose money by doing this.
But when paying the loan is causing you difficulty, it may be better to stop paying the loan now. It could take a very long while before a claim is decided.
Don’t borrow more money at an expensive rate or get behind with paying bills in order to keep up the repayments on Provident loans.
Instead tell Provident you don’t want to make any payments until your claim has been decided. This will harm your credit record, but that will all be cleaned up if your claim is upheld.
Talk to National Debtline on 0808 808 4000 if you are unsure what to do here – they can help you look at your full financial position.
Provident claims – key points to remember
- Provident didn’t make good affordability checks so a lot of people should get refunds.
- The more loans, the larger they were or the worse your situation, the better your chance of getting a refund.
- You will only get a percentage of the “proper” refund, but this may still be hundreds of pounds. And your credit record will be cleaned.
- You can claim if you still have a loan, including if the loan was sold to a debt collector.
- You only have 6 months to make a claim for Provident or Satsuma loans. Do it now so there is no chance of missing the deadline!