Payday lender WageDay Advance collapses.

Another payday lender, WageDay Advance has gone into administration. After the estimated cost of paying out compensation claims was put as high as £223 million.

WageDay follows Wonga into administration.

It follows the collapse of another payday lender giant, Wonga, last August. Wonga fell into administration with 10,500 customers claiming compensation.  Many are still awaiting ombudsman rulings on whether they were mis-sold loans.

WageDay Advance have many more expected claimants.  330,000 borrowers are expected to claim for compensation for mis-sold loans.  It is estimated, however, that they will only receive a fraction of the amount they are entitled to.

WageDay Advance gave loans to about 800,000 people before it went into administration earlier this year.

Customers have been receiving emails to explain how much they owe or are owed.

However, now the company is in administration, customers entitled to compensation and who have paid off their loans have become unsecured creditors.  Meaning, they can only expect a fraction of the full compensation payout.

WageDay Advance and Juo Loans were the brand names of CURO Transatlantic Limited.  They went into administration in February.

WageDay were somewhere in the middle of the payday lenders we see in the UK.  They were not as well known as some.  In 2017, it won an industry award when it was named the best short-term loan provider.

Most of their customers applied for loans online or through their smartphones.  Many had multiple loans from other providers.  Thousands of these customers complained, many via claims management companies.

The company built a claims calculator, which has estimated that current and former customers could be entitled to up to £223m in compensation, including interest.

An estimated 330,000 people are expected to have eligible claims for compensation.

Successful claims made last year had an average payout of £850.

The firm collapsed as it was unable to cope with the cost of dealing with these complaints and the potential payouts.

KPMG are the administrators. KPMG is now sending out emails to individuals.  Explaining how they can apply for compensation and how much they would be entitled to.  Or in cases where people are still having to pay back their loans, what their new balance is and how to pay it back.  If borrowers who are paying back have a compensation claim, they will still have to pay back what they owe less any monies substracted for compensation.   However, interest and charges have been stopped.

One debt expert explained: –  the total compensation bill reflected the “huge amount of interest many desperate people ended up paying. Payday loans are supposed to be short term borrowing. But too often Wageday Advance customers were caught in the payday loan trap for months and even years, only able to repay a loan if they borrowed again soon after.”

“Wageday Advance was a medium-size payday lender. It would be interesting to know if the other lenders have worked out how much they should be paying in refunds to customers given unaffordable loans.”

About 60,000 loans sold off.

About 60,000 loans, almost entirely recent loans without any compensation entitlement, were sold off to Shelby Finance Limited. And will continue as normal. Customers can check if they are one of those transferred on the WageDay website.

Fears over the level of personal debt built up by individuals continue to concern charities.

One charity stated: there has been a “small, but worrying” rise in the number of people seeking help who had payday, or high-cost and short-term, loans.

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