The Money Shop has set aside an £18million compensation pot for customers who were wrongly lent money to.
According to various news reports, it is believed the payday lender is preparing to close for good and The Money Shop is writing to its some 2 million customers offering them financial settlements for mis-sold payday loans.
The Money Shop has already started the process of closing some of its branches, reducing from 600 to around 200. Some of the branches have already been sold off to pawnbroker H&T Group and The Money Shop is expected to close the stores it cannot sell.
What Went Wrong With The Money Shop?
The Money Shop was fined £15 million in 2015 when the FCA clamped down on Payday lenders, the company was fined for carrying out poor affordability checks on its customers. In a letter to employees, informing them of redundancies, citing the unprecedented number of customer complaints received relating to the conduct of the business towards it’s customers.
The firm stopped handing out loans in August last year and saw a sharp rise in complaints. How much customers are entitled to depends on the claim and how many people are owed money.
How to claim compensation from payday lenders?
If you think you are owed compensation from a payday lender, according to Debt Camel, Here’s what you should do next:
You’ll need to prove that you couldn’t afford to take out the loan at the time that you borrowed it. If having the loan meant that you couldn’t pay your bills or other debts then you were irresponsibly lent to.
You may also be entitled to compensation if you had any late repayments, or if you took out back to back loans because this shows that you really couldn’t afford to take out a new one.
Debt Camel is advising customers to look back through their emails and bank statements and credit reporter for evidence. Then to write a formal complaint to each lender explaining how you were irresponsibly lent to and include evidence.
Make copies of all of the evidence before sending in case anything happens to them. You can also ask for the loan to be removed from your credit history. The company then has eight weeks to respond to you, if you don’t hear within that time you can refer your complaint to the Financial Ombudsman Service.