Credit, Collections & Insolvency News
Hundreds of thousands of people who were mis-sold high-cost short term loans will receive a fraction of the compensation they are entitled to after WageDay Advance loans collapsed into administration last month.
Customers are now receiving emails to explain how much they owe or are owed. However, now the company is in administration, those who have paid off loans but are entitled to compensation have become unsecured creditors. They can only expect a fraction of the full compensation payout.
WageDay Advance was the brand name of CURO Transatlantic, which went into administration in February.
An estimated 330,000 people are expected still to have eligible claims for compensation. Administrators from KPMG are calculating to determine how much individual customers still owe after compensation is subtracted.
About 60,000 loans – almost entirely recent loans without any compensation entitlement – were sold off to Shelby Finance Limited, and will continue as normal.
The administrators said in a statement: “The joint administrators will contact customers with outstanding balances owing to the companies in the coming weeks, as soon as they have determined their strategy for the remaining loan book. Outstanding loan balances due to the companies are being frozen such that no further interest and charges will accrue.”
“The joint administrators will also contact known potential creditors of the companies in the coming days, to provide details of their proposals for the administrations. This will include customers who have been identified by Curo Transatlantic as having a potential redress claim.”
Caroline Siarkiewicz, director and debt advice expert at the Single Financial Guidance Body, said “The news of the WageDay Advance collapse will cause uncertainty for their customers. While today’s news may tempt some to stop their repayments, it is important they carry on as normal because customers who have entered into a loan agreement must fulfil it.”
“When 11.5 million UK adults have less than £100 in savings, it’s inevitable that consumers have to borrow money to deal with everyday emergencies. Credit can also be vital for consumers making bulky purchases or smoothing income and expenditure. Accessing credit and loans can be complicated and confusing, and with half the UK population not feeling confident in making financial decisions, quick and easy short-term credit can be all too tempting.”
“We would urge anyone thinking they need to borrow money to shop around. There may be more affordable options available to you; particularly if you’re clear about how much you want to borrow, what for, and over what timeframe. If you are worried about making repayments you can visit the Money Advice Service website for further information. If you’re struggling with debt, it’s always best to talk to an experienced adviser. The Money Advice Service website has a free debt advice locator tool which will help you find your nearest free debt adviser.”
