Curo Transatlantic Limited (CTL) had two brands:
- Wageday Advance (WDA), a mid-sized payday lender; and
- Juo Loans, a small guarantor lender.
- The Administrators published Proposals for the administration in March and a set of FAQs. They can be downloaded from CURO Transatlantic Limited – in Administration.
- The proposals were approved by a ballot of creditors.
- Outstanding loans, less any compensation calculated, have been sold to Lantern.
- The Administrators have used their Claims Calculator (see below) to decide which WDA customers may be owed compensation for inappropriate lending;
- All customers owed compensation are being sent emails inviting them to submit a pre-completed Claim. Claims must be submitted by the end of August 2019;
- It is expected that payments will be made before the end of May 2020.
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.
Immediately after administration – was your account 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. You can check if your account was transferred by entering your details here.
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 remain 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 have been 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 have a balance outstanding and who should get redress are getting an email from the Administrators with the subject Important information about your loan.
These emails are being sent to anyone with a balance and a redress amount calculated, even if they haven’t submitted a complaint. They started being sent out on 27 March.
The email has a section headed: Your provisionally adjusted outstanding balance which has the key figures. Now that the Administrators’ proposals have been agreed, these numbers 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 be informed of the calculated amount
If you are owed redress the Administrators are sending emails with the subject Important information about your redress claim. These started to go out in early April.
- what your calculated redress amount is;
- that you are an unsecured creditor with a claim against CTL for this redress amount;
- there is a button in the email to Submit your Claim. This is very easy – it takes you to a form which is already prefilled with all your details and the amount.
- There was another button that lets you vote on the Proposals – the date for voting has passed and this is no longer relevant.
You will also get this email if you had an outstanding loan but the redress amount was larger. So if you owed a balance of £240 and the calculated redress was £1000, the balance would be reduced to zero and you have to submit a claim for £760 from CTL.
Payments will be made before the end of May 2020
The money the Administrators have left will be divided up between the unsecured creditors, including all the customers owed redress amounts.
You won’t be paid the full value of the redress because there will not be enough money. You will get a percentage, which is often described as getting some number of pence in the pound, for example “10p in the £”.
How much you will get will depend on:
- how many people submit claims. Some people may not bother or may not see the email from the Administrators; and
- how much money the administrators have to distribute to the creditors.
What has happened in other payday lender administrations has no relevance to the amount you may get. People who had refunds agreed before administration do not get any priority. This isn’t a decision by the Administrators, it is what legally has to happen.
The Administrators have said that payments will be made by the end of May 2020.
The Administrators say that they will update customers’ credit files. This will include the removal of credit records for loans that they have decided should be refunded because they are inappropriate.
FAQs on submitting claims
“I have already had a refund – can I really get more?”
Yes. This isn’t an error.
“I want to submit the Claim but my bank details have changed”
The Submit Your Claim page shows the last 4 digits of your bank account number that WDA had on file.
If this is no longer correct, you should still submit the claim and then email the administrators with your new account details. There is going to be time to get all this sorted out, you don’t need to worry about this.
“What can I do if I think I should get more than they have calculated”
There is no option being provided for you to just say you should get more and could they look at it again – I am afraid you have to do the work to calculate what you should get. You are only going to get paid a small proportion of this calculated amount anyway, so you have to decide how much work it is worth putting into this.
It is pretty unusual for anyone to get a full refund for all their loans from the Financial Ombudsman and most people do not get a refund of the first few loans. Read Schedule 1 & 2 of the Proposals – they show how the Claims Calculator has decided if loans are unaffordable. After reading that, if you still think that some of your loans should have been refunded, you need to calculate the interest you paid on the loans and the 8% statutory interest that would be added.
When you have done this, download a Claim Form For Use By Redress Creditors from this page. In box 4 of that need to enter your calculation of how large a refund you should get, including the additional 8% statutory interest. In box 5 you need to describe which loans you are saying should be refunded and why – this will probably mean you have to add a separate page.
“What is the deadline for submitting claims?”
It’s 23:59 hours on 31 August 2019.
Contacting the Administrators
About redress and complaints
If you are worried because you haven’t yet had an email, first check your spam folder!
If your contact details have changed from the ones when you were taking loans from CTL, email firstname.lastname@example.org with your new contact details. The customer service centre will resend any communications you have not received.
If you don’t receive an email from the Administrators but think you have a valid claim, follow the procedure above in “What can I do if I think I should get more than they have calculated”. You will have to estimate how much your refund might be and explain why you think it is due.
About any balances owed
For queries about an outstanding loan, the provisional balance adjustment and payments to the loans email email@example.com . There is a phone number, 0330 094 5695, but some people are having problems getting through.
If you have any other questions, leave a comment below!
Updated – 2 May 2019. Thanks to all the readers that helped with this!