Sunday, January 16, 2022

POCKET MONEY Thousands of customers are receiving payday loan refunds of up to £50 – with cash in accounts starting today

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PAYDAY loan customers who have fallen victim to prohibitive interest rates will start receiving payouts in their bank accounts starting today.

 

Cash transfers are being sent to thousands of Money Shop, Payday Express and Payday UK customers as compensation – but payouts could be a lot smaller than expected.

 

It is part of a Scheme of Arrangements with the three lenders’ parent company, Instant Cash Loans (ICL).

 

Borrowers receive much less cash compensation than the amount they were loaned, as the £18m made available by ICL has to be shared by almost two million customers.

 

Debt expert Sara Williams, who runs Debt Camel blog, said: “Some people get £50 but many stand in line for less than a fiver.”

 

ICL stopped making new loans to borrowers in August 2018 and announced a compensation program for customers who missold loans prior to October 2019.

 

A first round of payments was sent to borrowers in May and June last year.

 

The second and final payment round begins today.

 

Borrowers must have submitted claims in the past year to be eligible for cash payments.

 

If your application is accepted, the amount you get will vary depending on how much you borrowed.

 

For example, if you received £100 in May, you may now receive £15.

 

But the refunds are much smaller than what you borrowed.

 

That’s because ICL has agreed to pay just 4.31p for every £1 borrowed in the first payment and 0.65p for every £1 borrowed over the second cash payment.

 

Williams also warned borrowers that if they don’t receive cash by Jan. 20, they must watch their payment and notify ICL.

 

After this date, ICL will be liquidated and you will no longer be able to receive the money.

 

We’ve reached out to ICL for comment, but haven’t received a response yet.

 

The cost of handling similar complaints led to the collapse of payday lender Wonga in the summer of 2018.

 

A number of other high-profile firms, including QuickQuid and Peachy, have also collapsed, leaving thousands of customers without full compensation for badly sold loans.

 

The Financial Conduct Authority has been asked to close this loophole to protect customers.

 

Williams added: “Before the program started, Money Shop’s complaint handling was very poor and many strong affordability complaints were rejected.

 

“Now people have acknowledged these denied complaints in the program, but they’re only getting 5% of the full refund they should have been entitled to.”

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