Provident, one of the oldest short term loans lenders in the UK, announced both their Provident Home Credit and Satsuma brands would cease offering loans leaving their Vanquis and Moneybarn divisions to continue as normal.
In 2020 Sunny also announced the level of complaints redress was such that they also had to enter administration. This follows a long line of established companies going bust due to the raft of complaints upheld by the Financial Ombudsmen around the companies’ lending practices and affordability assessments.
What caused these companies to go into administration?
Since 2018 a large number of Short-Term High-Cost Credit firms have gone into administration. These include some high street brands like Wonga, Quick Quid, The Money Shop, Wage Day Advance, Swift Sterling and MyJar, Peachy, Uncle Buck, Cash Genie and Piggy Bank.
The main reason these companies have given is the level of redress they have had to pay out due to upheld complaints about irresponsible lending and inadequate affordability assessments.
For example, it was estimated around 500,000 out of the 700,000 Sunny customers would have had a valid claim.
Tidal wave of complaints
Since 2015 the level of complaints to the Financial Ombudsmen Service (FOS) has been increasing rapidly. The second half of 2019 saw 2,897 complaints made against Sunny with over 2150 being upheld. This meant the company had to set aside huge amounts of funds to pay back mis-sold loans, redress unaffordable loans and pay the FOS charges relevant to these complaints.
Provident Home Care saw similar increases – however, Provident also saw a huge increase in the upheld rate of complaints by the FOS, from 38% in 2018 to 75% in 2020. This led to the company creating a “scheme of arrangement” that is attempting to cap shareholders liability at a whopping £50m.
I am a customer – what should I do?
If you have an open loan with a lender who has gone into administration, you should continue to pay the loan as normal and agreed. Keep to your original schedule as missing payments can still affect your credit report and may incur charges, depending on the companies own procedures.
Can I get a new loan with Sunny, Provident or Satsuma?
These companies will not be offering new loans. Their existing services should be unaffected if you need to mange an existing loan – please check the companies own processes.
I have a claim – what should I do?
If you have made a successful claim for compensation before they entered administration, you will then join the list of creditors to be paid by the administrator. Once the business has been fully wound up any assets left will be distributed to the creditors, including yourself.
Can I make a claim after the company goes into administration?
After administrators have been appointed it is usually down to the FOS to clarify this on a case-by-case basis. You will need to check your own information on the relevant company for this.
Is QuidMarket going into administration?
No. Here at QuidMarket we work a little differently to most other lenders in the high-cost short term sector – we are not in any danger of entering into administration.
Why is QuidMarket not going into administration?
We like to process each and EVERY application manually. We have a person looking at your information, a person who performs the affordability assessment and ultimately, you will never be given a loan that a PERSON has not deemed valid, affordable, and not detrimental to your longer-term financial situation.
If we feel the product is not right for you, we will not approve the loan – it is as simple as that. We appreciate this may be frustrating at the time, but we also appreciate the longer-term benefits of not being trapped in a cycle of debt and the negative impact this can have on your credit file, mental health, relationships, and life in general.
Do QuidMarket receive complaints?
Yes. It is impossible to get things right 100% of the time – although that is what we aim for. Recently the FOS released data about the level of complaints made against QuidMarket, our responsible lending and affordability.
We are proud to say we are the leaders in our industry when it comes to our “upheld rate” (the number of complaints upheld with the FOS in favour of the customer) While the industry has an uphold rate of between 65% and 73%, QuidMarket has an uphold rate of just 20%.
As said above, the extra care and attention we put in to assessing applications means that very few complaints against our company are upheld. Unlike other firms who have very high uphold rates, we prioritise positive customer outcomes over profit.
What do I do if I cannot afford to pay my loan?
Even if the loan company has gone into administration, you must still pay the loan as agreed. If you are struggling to repay your loan, there are a number of free debt advice companies that can give impartial debt advice.
See our previous blog “Help and Advice” for more information about this. Communication is key. Get in touch as early as possible to allow more options and flexibility when discussing your loan going forward.
If, however, you feel your financial difficulties are more far-reaching there are several options available to people, including National Debtline, Stepchange, PayPlan, The Citizens Advice Service and The Money Advice Service.