TWO payday lenders have gone bust leaving 650,000 customers in limbo over what to do about their loans.
The struggling lenders WageDayAdvance and Juo Loans are both owned by the same parent company which filed for administration yesterday.
WageDayAdvance has gone bust leaving customers in limbo over loans
More than 50,000 Curo Transatlantic Limited (CTL) customers, including all Juro borrowers, have been sold to Shelby Finance, which is owned by Morses Club.
These customers will be notified that they have been transferred in the next few days and repayments should continue as normal.
But 650,000 customers – including those who no longer have a loan – will remain with CTL.
A spokesperson from administrators KPGM told The Sun that all payments, interest and charges will be frozen until a decision has been made about what to do next.
All Juo loans customers have been sold to Shelby Finance which is owned by Morses Club
WageDayAdvance was processing thousands of compensation claims from borrowers who accused it of irresponsibly lending £18million in total, by charging rip-off interest rates and targeting vulnerable customers.
Ed Boyle, from KPMG, said that the sale of part of the business was the “best available outcome”.
He added: “Over time, and with the number of claims increasing, the financial and operational burden of resolving them became unsustainable.
“The Joint Administrators will now work to realise the remaining assets of the Company and to then distribute the available funds to creditors.”
The firm’s closure follows in the steps of Wonga which went bust in August last year for the same reasons.
At least 1,930 WageDayAdvance customers have logged compensation complaints with the Financial Ombudsman although there are potentially thousands more who may have launched claims directly with the firm.
How to claim compensation from payday lendersIF you think you are owed compensation from a payday lender then here’s how to claim according to money blogger DebtCamel:You’ll need to prove that you couldn’t afford to take out the loan at the time that you borrowed it. If having the loan meant that you couldn’t pay your bills or other debts then you were irresponsibly lent to.
You may also me entitled to compensation if you had any late repayments, or if you took out back to back loans because this shows that you really couldn’t afford to take out a new one.
Look back through your emails, bank statements and credit reporter for evidence.
You’ll need to write a formal complaint letter to each lender explaining how you were irresponsibly lent to and include the evidence.
You’ll need to cite “unaffordable loans” and ask for a refund of the interest and charges you paid, as well as the 8 per cent Ombudsman interest on top.
Make copies of all of the evidence before sending in case anything happens to them.
Also ask for the loan to be removed from your credit record.
You can find a letter template here.
Wait up to eight weeks to hear back from them. If you’re not happy with the answer, or they don’t get back to you, contact the Financial Ombudsman.
Administrators are currently planning how to distribute the remaining funds, although it’s still not clear whether there will be enough cash to payback customers who have already submitted a compensation claim.
KPMG has also confirmed that it will be contacting old customers who it thinks it might be owed cash and encouraging them to submit a complaint.
If the process is anything like what happened to Wonga customers, the firms will stop paying refunds immediately, including to those who have already been agreed.
Complaints logged with the ombudsman will be passed back to the administrators and customers are only likely to get a percentage of the refund they are owed.
It could take months before these claims are processed and payments made.
WageDayAdvance stopped lending to customers a week ago, blaming technical problems on its website, according to Debt Camel.
Yesterday, the Financial Conduct Authority turned down an application from the firm to cap the amount it refunds customers.
Debt campaigner Sara Williams, who runs the Debt Camel, said: “WageDay Advance has given payday loans to hundreds of thousands of customers, in many cases without making adequate affordability checks.
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“These customers have been let down twice by the regulators in Britain.
“Wageday Advance was allowed to get away with irresponsible lending for years and now it has gone into administration, it is unlikely that people who have complained will get proper compensation for this.”
Payday lenders have been slammed for dragging their heels over mis-selling payouts.
Here’s our guide to finding out whether you’re entitled to compensation and how to claim the cash.
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