Millions Awaiting Payment As The Money Shop “Sets Up £ 18million Payday Loan Clearing Pot”
PAYDAY lender The Money Shop is said to have set aside a £ 18million compensation pot for customers who were loaned out when they couldn’t afford it.
It comes as the high-cost creditor and pawnshop prepare to shut down for good, reports Sky News.
The broadcaster adds that The Money Shop would write to 2 million customers offering financial settlements if their abuse claims are substantiated.
We have sent this to the owner of The Money Shop, Instant Cash Loans (ICL), which also owns Payday Express and Payday UK, but have yet to receive a response.
Payday lender The Money Shop recently closed branches, reducing its portfolio of 600 stores on Main Street to around 200.
Some stores have been sold to pawnshop H&T Group, but it is expected to close branches it cannot move.
How to claim compensation from payday lenders
IF you think a payday lender owes you compensation, here’s how to make a claim according to financial blogger DebtCamel:
You will need to prove that you could not afford the loan when you borrowed it. If having the loan meant you couldn’t pay your bills or other debts, then you were loaned irresponsibly.
You may also be entitled to compensation if you have had late repayments, or have taken out back-to-back loans as this shows that you really could not afford a new one.
Examine your emails, bank statements, and your credit reporter for evidence.
You will need to write an official complaint letter to each lender explaining how you were irresponsibly loaned out and include the evidence.
You will have to cite “unaffordable loans” and seek reimbursement of the interest and fees you paid, as well as the 8% interest from the Ombudsman on top.
Make copies of all evidence before sending it in in case something happens to them.
Also request that the loan be removed from your credit report.
You can find a letter template here.
Wait up to eight weeks to hear from them. If you are not satisfied with the response or they do not respond to you, contact the financial mediator.
It is believed to be in trouble following an influx of complaints from claims handling companies representing customers who believe they have been irresponsibly loaned out.
The company stopped granting loans in August last year, but since then the number of complaints has risen sharply.
The cost of dealing with similar complaints incurred Payday lender Wonga to collapse last summer.
The amount customers may be entitled to from The Money Shop depends on the claim and how many others are also owed in cash.
But a debt activist warns that they will likely be offered less than what is owed to them.
Sara Williams, who runs the Debt camel blog, said: “Hundreds of thousands of customers of The Money Shop, Payday UK and Payday Express have obtained unaffordable loans.
“They were abandoned by a regulatory system that allowed this to happen and now they will be again because they will likely only get a small amount of what they should have been paid back.”
Customers who decline the compensation offer are likely to be added to a long list of creditors owed in cash if the business goes bankrupt and is at risk of missing out.
ICL, which is owned by US hedge fund HPS Investment Partners, is due to seek creditors’ approval of the plan and a vote is expected in September.
Sky News reports that the company has been in talks with the Financial Conduct Authority (FCA) about the program for weeks.
While the future of the business is uncertain, current customers should continue to repay normally and manage their accounts online.
HHPS Investment Partners declined to comment.
In February, WageDayAdvance and Juo Loans entered into management leaving 650,000 customers in payday loan limbo.
Recently the companies have been criticized by claimant experts for “dragging their feet” remittance of payments.
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