Wage Day Advance and Juo Loans collapse into administration

It has been recently revealed that at the end of February the company that owns payday lenders Wage Day Advance and Juo Loans, CURO Transatlantic Limited, has now gone into administration. This follows on from the huge collapse of UK payday lender Wonga, in August of last year.

What has led to their collapse?

The collapse of these payday lenders is similar to the reasons why Wonga ended up going bust in August 2018. Wage Day Advance had been processing thousands of compensation complaints, after being accused of having irresponsibly lent a staggering £18 million. This has been argued to have been achieved through sky-high interest rates and targeting customers considered to be vulnerable. It is estimated that nearly 2000 Wage Day Advance customers have lodged complaints with the Financial Ombudsman Service. Nevertheless, there could be many more who have made complaints directly with the payday loan company. These complaints have led the financial and operational burden of trying to solve them for the company completely unsustainable as a business model.

What happens next?

The accounting firm KPMG has now been appointed as the administrator of CURO Transatlantic Limited (CTL), with the company now sold to Shelby Finance Limited, which is owned by Morses Club This means that an estimated 50,000 customers accounts will be moved to this business, who will be notified of this transferral taking place in the upcoming weeks. It is expected that repayments will continue as normal for these customers.

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However, there still remains over 650,000 customer accounts (current and also those who no longer have a loan) will still remain with the administrators, CTL. At this moment in time, it has not been made clear as to exactly what will happen to these customers, such as those who may have made a mis-selling complaint against the payday lenders, or who still have outstanding balances. However, customers who make their repayments via an agent have been advised by KPMG to continue making repayments.

In a statement by the Financial Conduct Authority about the shutdown, it said that: “Customers should continue to make any outstanding payments as instructed by the administrators, KPMG. All existing agreements remain in place and will not be affected by the proposed administration. However, the firm is no longer able to issue new loans.”

Will customers get their money back?

At this moment in time, administrators are currently deciding as to how to distribute the remaining funds available to borrowers. However, it still remains unclear as to whether it will be financially viable for all customers who have made a claim that has been upheld will receive the full amount they are entitled to.

How do I know if my payday loan has been sold?

If you are Wage Day Advance or Juo Loans customers, your loan may have been sold to Shelby Finance Limited. You will be contacted by the business shortly, or you can check your online account.

What if my payday loan has not been sold?

The administrators of  CTL, KPMG have stated that they will be contacting customers who have outstanding balances in the next few weeks. Furthermore, they will also be contacting customers who they believe could redress claims and make a compensation claim. However, debt experts recommend to keep this in perspective: oftentimes, claiming money back from a business after it has gone into administration can prove unfruitful, as you will be a considerably long way down the list of creditors whom to be paid back.