UPDATE On 20 May 2020 the Administrators announced:
- everyone will get 5.68p in the £.
- people should get an email sent today “or shortly afterwards” saying their dividend payment has been made.
- payments are being made to the bank accounts they currently have on file. It is too late to change this account.
- if you get this email but no payment is received within 7 days, you need to contact the administrators and provide details of an alternative bank account.
Let’s hope this all goes more smoothly than the Wonga payouts did!
This is what the email you get should look like. The number I have ringed in red is the actual payment you will get. This 5.86% of the amount your affordability complaint was assessed at.
Summary of the administration
Curo Transatlantic Limited (CTL) had two brands:
- Wageday Advance (WDA), a mid-sized payday lender; and
- Juo Loans, a small guarantor lender.
SpeedyCash was also part of the same group as Wageday Advance. It was a brand name of SRC Transatlantic Limited which went into administration at the end of February 2019. See SpeedyCash in administration – send affordability claims by end July 2019 for the separate administration proposals and arrangements for SpeedyCash.The Administrators published Proposals for the administration in March and a set of FAQs.
- The Administrators proposal were approved by a ballot of creditors.
- Outstanding loans, less any compensation calculated, have been sold to Shelby or Lantern.
- The Administrators used a Claims Calculator to decide which WDA customers may be owed compensation for inappropriate lending;
- 256,000 customers owed compensation were sent emails inviting them to submit a pre-completed Claim. The deadline for Claims to be submitted has now passed.
- In September it was announced that c.100,000 claims were received and that the administrators expect to pay c. 5p in the pound to customers who made a claim.
- On 20 May 2020 the final dividend of 5.68p in the £ was announced. The total amount being distributed is £7,232,445.
Background to the administration
Like other payday lenders, WDA had seen increasing numbers of affordability complaints for several years.
In June 2018 WDA asked KPMG to look at a Scheme of Arrangement (“Plan A”), which would cap its liabilities for historic complaints. At this point, WDA was already struggling with affordability complaints – the cost of refunds, the administrative overhead and the FOS fees.
From June-September affordability complaints increased significantly, with 16,000 being received during the four months.
In October WDA asked KPMG to also look at the alternative of a sale of the business (“Plan B”). CTL’s parent company, the American subprime lender Curo, said:
we do not believe that, given the scale of our U.K. operations, we can sustain claims at this level and may not be able to continue viable U.K. business operations without action by the U.K. business to reduce the risk of claims relating to historic lending.
In the autumn, WDA stopped responding to customer complaints within the allowed 8 weeks. Many customers did not receive a response for 16, 20 or more weeks.
As part of the planning, a Claims Calculator was developed to assess all previous lending. This estimated that the total potential liability for affordability complaints could be as much as £223m.
In January 2019, Curo announced it had asked the FCA to say whether it would object to a Scheme of Arrangement which would cap CTL’s liabilities to pay refunds for unaffordable lending at c £18 million. The Administrators admit that:
redress creditors would … have faced a very significant shortfall against the value of their claims in the Scheme.
It is hard to imagine why the FCA might have thought this was a reasonable offer.
On 19 February, the FCA said it needed further information about the proposed Scheme. At that point, CTL decided it was unlikely to get Plan A approved. It decided to appoint administrators and proceed with Plan B. At this time it stopped offering loans through the Wageday Advance website.
Sales to Shelby and Lantern
Immediately on administration – some accounts sold to Shelby
The Administrators announced a sale of much of CTL’s infrastructure to Shelby Finance for c £8.5 million. Shelby currently trade as Dot Dot, a very small payday lender, and are a subsidiary of the doorstep lender, Morses Club. This is known as a “pre pack” sale – it was all planned before the administration started.
50,000 CTL customers, including all Juo customers, have had their loans transferred to Shelby.
The accounts sold to Shelby were considered to be “in good standing” with no arrears. The Administrators say “a small number” of people who were transferred to Shelby may get some compensation for unaffordable lending – those affected will get an email from Shelby about this. But most people transferred to Shelby will not be getting any refunds.
650,000 other CTL accounts remained with CTL. Many of these are accounts that have not been used for some time. Many current and old customers may be owed compensation for inappropriate lending.
Outstanding loans sold to Lantern in May 2019
No payments for outstanding loans were taken by the Administrators. Balances were frozen, with no further interest or charges added. Credit records will be corrected so no late/missed payments will be recorded because of this.
Many people with outstanding balances may have these reduced because of redress, see below.
In May 2019 the loan book – that is the legal term for all the outstanding loans – was sold to Lantern, a debt collector previously known as Motormile Finance.
If your loan has been sold, you will get an email explaining this. You will need to make a payment arrangement with Lantern for the balance outstanding.
I would expect Lantern to be understanding if you can’t make a high monthly payment. Don’t offer so much you will have to borrow from someone else to make these repayments. No interest will be added from here on.
Determining complaints and calculating redress
WDA stopped its normal complaints handling when the administration started. It has not paid any refunds after administration, including refunds that were agreed before administration.
Under the Insolvency Act the Financial Ombudsman (FOS) couldn’t carry on with their decision making once a firm goes into administration. All WDA complaints with FOS were returned to the Administrators to settle.
The Claims Calculator
The Administrators’ Proposals explain how they are deciding if a customer should not have been given some loans and what the compensation, which they call redress, is for those loans. Here is a brief summary.
The Administrators have put all loans from Wageday Advance, past and present, including those over 6 years old, through the Claims Calculator that has been developed.
This is being used to reduce administrative costs. If complaints were looked at individually it would significantly reduce the money left to settle the complaints which were upheld.
The Claims Calculator is intended to give roughly similar results to typical FOS decisions. A loan is determined to be inappropriate by the calculator if it fails any of three sets of criteria:
- affordable – looks at loan size, income and expenditure evidence;
- sustainable – looks at the number of loans, the gaps between loans, roll-overs and how much loan amounts increased;
- responsible lending – looks at what a CRA check showed eg defaults, debt management and numbers of other payday loans.
For inappropriate loans, a redress amount is calculated as a refund of interest and charges, plus 8% statutory interest. Adding these up gives a total redress amount for each customer.
If you have already had an offer or a FOS decision
The Administrators will set your redress amount at the largest of:
- what the Claims Calculator says;
- any Final Response offer from WDA; and
- the value of redress determined by the Financial Ombudsman.
Customers who still owe a balance
People who had a balance outstanding and who should get redress got an email from the Administrators with the subject Important information about your loan.
These emails were sent to anyone with a balance and a redress amount calculated, even if they haven’t submitted a complaint.
The Administrators’ proposals were agreed, so the numbers in these emails are no longer “provisional” but final.
If you still owe money after this reduction
Here is an example of the key figures:
- Outstanding loan balance at 25 February 2019 per CTL’s records 420
- Less: Provisional balance adjustment (165)
- Provisionally adjusted loan balance 255.
If your redress is smaller than the balance, you will still owe some money – £255 in the above example.
Where someone has only had one loan, it looks as though the balance has been reduced to the amount borrowed less what the customer has paid so far. This is what FOS would have decided if the loan was unaffordable.
The Administrators will contact you in the next few weeks to give you the bank account details to make payments to. If you already have these details because you were in a payment arrangement, you can make payments now if you want.
The Administrators will be selling outstanding loans to a debt collector. If you only have a small balance left that you can easily clear, you may prefer to do that. Or you can plan to make an affordable payment arrangement with the debt collector.
If the redress is larger than the amount you owe
If your calculated redress is larger than your balance your email will look something like:
- Outstanding loan balance at 25 February 2019 per CTL’s records 240
- Less: Provisional balance adjustment (240)
- Provisionally adjusted loan balance Nil.
You will then get a further email (see below) saying you are owed redress.
If you are owed redress
You will have been informed of the calculated amount
The Administrators sent emails with the subject Important information about your redress claim.
- what your calculated redress amount is;
- that you are an unsecured creditor with a claim against CTL for this redress amount;
- there was button in the email to submit your claim – the deadline for doing this has now passed. You can no longer submit a Claim.
“My bank details have changed”
The Submit Your Claim page showed the last 4 digits of your bank account number that WDA had on file.
It is now (20 May 2020) too late to change the account details for the first run of payments. If you do not receive your payment, inform the administrators then of your new account.
The Administrators will update customers’ credit files to remove credit records for loans that they have decided should be refunded because they are inappropriate.
Contacting the Administrators
No phone contact is possible because of Coronavirus. The email for contact is:
Updated – 20 May 2020