UPDATE – Sunny went into administration on 29 June.
See 500,000 Sunny customers owed refunds will get little or nothing for the latest news about what customers will get.
And see Kerrigan v Elevate Credit – an “unfair relationship” for my thoughts on the court case Sunny lost, badly.
Elevate Credit International Limited, which trades as Sunny, has filed a Notice of Intent to appoint administrators. It told the Telegraph that:
“Unfortunately, due to the ongoing economic uncertainty as a result of coronavirus and the continued regulatory pressure on the business, we have had to take the difficult decision to give notice to appoint administrators.”
A Notice of Intent gives a company ten days of protection from its creditors.
Sunny is one of the largest UK payday lenders. If it fails, it will join a long list of lenders who have collapsed in the last nine months: QuickQuid, Moneybox 247, Swift Sterling, Piggybank, Nextcredit, Peachy, Uncle Buck.
Sunny’s US parent had previously been hopeful
Elevate Credit International Limited is the UK subsidiary of the US subprime lender Elevate Credit, Inc.
In May 2020, Elevate Credt, Inc, said its net income from the UK had decreased by $6 million from the previous year, resulting in a net loss for the quarter. It attributed this loss to:
a shrinking loan portfolio, along with a steady stream of affordability complaint expense.
Sunny had made just 10,000 new customer loans in Q1 2020, down from 30,000 in Q1 2019. This was attributed to:
the ever stringent customer affordability regulations in the UK.
But at that time the US parent said:
we remain hopeful that we can work with the UK regulators during the second quarter of 2020 to come to an understanding on how we can begin growing the UK business again, as our UK unit economics are very good.
With the UK subsidiary looking likely to fail, it seems its US parent has given up this hope.
Sunny losing 76% of cases at the Financial Ombudsman
In the payday loan trap, repaying a loan leaves the borrower so short they have to take out another one. And another one. And another one.
The FCA says that a lender has to make reasonable checks that a loan it gives is “affordable” – that the borrower can repay the loan without having to borrow more money or fall behind with other bills and debts.
Since 2015 an increasing number of borrowers have complained that Sunny and other payday lenders have given them unaffordable loans.
The Financial Ombudsman (FOS) has set out what it looks for in a case about unaffordable lending. If the first loan was small a lender doesn’t have to do a lot of checks on affordability. But when a borrower keeps applying for more loans, that is a sign that the loans aren’t affordable, even if they are repaid on time.
In the last half of 2019, FOS received 2,897 complaints about Sunny. During that six months, FOS agreed with the customer in 76% of Sunny cases. This is more than twice as high as the average uphold rate across all FOS cases, which was just 35% for that period.
The FCA’s DISP rules, which set out how firms have to handle complaints, say lenders should learn from FOS decisions and make the same decisions themselves when a customer complains. But Elevate Credit, Inc said in 2019 that it thought the regulatory situation was “unclear”. In my article last year Sunny concerned about lack of regulatory clarity I gave examples of various FOS Sunny cases. They seemed consistent and clear to me.
Comments are now closed on this article.
Steve says
I have,within the last week,had a settlement offer through my adjudicator at the financial ombudsman.
i have accepted said offer and my adjudicator has informed elevate/sunny of my acceptance.
Can i please ask if you have any idea of how these developments leave me and will this effect the settlement offer?
Thank you
Steve says
The offer i speak of was issued by sunny in respect of a adjudicator making contact with them.they did not agree with the adjudicator s views hence they came back with their view and indeed an offer which i have accepted.
It did not go to the ombudsman queue as i decided to accept the offer.
I was just wondering since the offer has been accepted and sunny informed of this what the likely outcome would be now.
Sara (Debt Camel) says
It is possible it may be paid out before Sunny goes into administration but I wouldn’t get your hopes up.
If it isn’t then it is likely the payment will not go through as administrators usually halt all payments. In that case you will become an unsecured creditor with a Claim against the company.
The Claim may well be assessed by the administrators to include more loans than Sunny offered. But you are likely to only get a small percentage of that figure paid out and that may take more than a year. Even though your payout has been agreed, you will not have any priority over other claims.
Sara says
Me too. I’m due to be paid out this Friday. Gutted.
Andy says
So given the recent news of sunny. I should of been due redress payment by Monday/Wednesday is that impossible now?
Sara (Debt Camel) says
It’s not impossible – Sunny are not yet in administration and they could choose to carry on paying out until the point they are, but they may choose to go slow.
And administration may be announced in the next day or two – the first thing administrators often do is halt all payments.
Nick says
I was lucky enough to be made a reasonable offer by Sunny just before Christmas, My initial complaint was rejected but I emailed the MD before sending to the Ombudsman, & they then made an offer to write off the remaining balance & repay the interest. This equated to around £6000 (with a repayment of around £3k) so I accepted. I was worried that they might go into Admin (didn’t get much from Wonga). So glad I complained when I did!
Craig says
I raised a affordability complaint with Sunny back in 2017. They rejected it and stupidly I missed the deadline to go to the ombudsman. They froze payments on 2 loans I had at the time – both of which are still ‘outstanding’ but have never chased me for the money. I was considering paying off the loans as now have the ability to do it. Only circa £500. Now with the news of them potentially going into Administration should I just leave them?
Sara (Debt Camel) says
I think you should wait and see. It may be possible to put a Claim into the administrators (assuming Sunny does go into administration) and get your complaint assessed – in that case you are better off NOT paying them any more money now as any refund can be used to repay your balance.
Craig says
Will that be possible to resubmit a claim? Previously when I’ve tried to complain they have rejected it saying they have already assessed my complaint and won’t be doing anything. If administrators are appointed does this change my rights?
Sara (Debt Camel) says
Anyone can put in a Claim in an Administration. The administrators will then assess this. It is possible they could reject it as already having been a complaint but it is more likely they will assess this on a different basis to what Sunny originally did, closer to what FOS would have decided, so it could be upheld.
You need to wait until the Administrators announce how to put in a Claim. (And of course at the moment sunny are not yet in administration.)
Phil says
My sincerest thoughts go out to anyone on here waiting for a claim from them. After the initial excitement of seeing them being put in the bin, my thoughts immediately turned to those who where in a similar situation to myself, just only this year. I felt sick with trepidation after I realised. Hope those you can, get decent recompense
Ayyesha says
What happens if the ombudsman has made a decision and they go into administration?
Sara (Debt Camel) says
is this a decision from an adjudicator at the FOS or from an Ombudsman?
Ayyesha says
Its from the ombudsman. The adjudicator advised me to reject the first offer and the ombudsman made a decision.
Sara (Debt Camel) says
It is possible it may be paid out before Sunny goes into administration but you should not assume this will happen. From here administration can happen very fast.
Administrators usually halt all payments immediately administration starts. In that case you will become an unsecured creditor with a Claim against the company.
You are likely to only get a small percentage of that figure paid out and that may take more than a year. Even though your payout has been agreed, you will not have any priority over other claims.
Very bad timing for you .
Craig says
Absolutely gutted to read this post, just received an email asking for my bank details for my redress to be paid in after a very long drawn out complaint that was founded in my favour, now looks yet again I’ll be shafted
Angela says
What if I havent paid off my loan with Sunny?
Sara (Debt Camel) says
have you made an affordability complaint to them?
if you haven’t, how many loans have you had from Sunny?
Jordan says
This is an absolute nightmare. I was due to have 2 defaults removed by Sunny in the next few weeks. Now it will take years just like the WDA and Wonga sagas.
I feel desperately sorry for all the people who are going to be screwed over again.
Luucy says
I’d just accepted the offer from Sunny , I emailed my bank details . I’m going to keep my fingers crossed for us all . I supose never give up hope !
Dd says
When did you email Luucy, I sent mobe last Monday but not hopeful now
Luucy says
Hi Dd
Same as you, last Monday. When I read the news, I thought, just my luck ! But I dont think we should give up hope , you never know !
Timka says
I had adjudicator email me 2 weeks ago to say Sunny had made an offer to refund loans 21 to 40. I accepted the offer straight away for this very reason that they would go under water. I received my settlement 3 days ago. I am very grateful this happened. I lost £3k plus when Wonga got into administration so at least got something from Sunny.
My heart sank for all those people who are awaiting their settlements, I hope they are paid out as I know what a massive difference it makes.
Timka says
I meant to say, I did not know they would go into administration but feared it would happen as with other payday lenders.
Dd says
How many days from giving them your bank details till the money went into your account? Clinging on to the hope it may be on it’s way already
Timka says
Around 10 days but I sent a chaser after 6 days. I hope you get your money.
Sara says
Sunny told me 4 weeks from date of acceptance. Mine was 6th June. Sent bank details and Sunny emailed me and said 4 weeks. That takes it to the end of this week. I live in hope
paul says
I won’t get lucky this time it seems – last time i just got in on time; accepted offer from Swift Stirling, paid out a day or two later and then a week later heard they went into admin, but with Sunny, just missed the boat
Andy says
Absolutely gutted. Was offered £1300, less than half what the FOS adjudicator had upheld. Turned it down, have been waiting 6 weeks since refusing their offer on an Ombudsman decision and now this. No doubt another 5p in the pound offer about 18 months down the line. Disgusting.