PAYDAY lender PiggyBank has gone bust leaving thousands of customers in limbo over repayments and compensation.
The company specialised in lending cash for between £100 and £1,000 to borrowers with poor credit, charging sky high interest rates of up to 1,698.1 per cent APR.
The short-term loans had to be paid back over periods of between seven days and five months.
According to its website, the company went into administration on December 5. It was last reported to have around 45,000 borrowers on the books.
The struggling firm had been temporarily banned from handing out cash in July this year over concerns that it was lending irresponsibly.
It's the latest in a string of payday lenders going into administration following the demise of one of the UK's biggest short-term lender, Wonga, in August last year.
Are you due a payday loan refund?
MILLIONS of payday loan customers may be due refunds.
Refund or compensation is often given where the loan was mis-sold or where affordability checks weren't stringent enough. Here's all you need to know:
- Customers who've paid off payday loans debts can still claim. Even if you've paid off your debts you may still be able to get a refund if you struggled to repay the money at the time.
- If you're still paying off payday loan debts you can still complain. You can complain if you've struggled to make repayments. If your complaint is successful it could lower the amount you owe.
- You can still claim is the firm no longer exists. Big firms such as Wonga and QuidQuick no longer operate but that doesn't mean you can't get some money back. Customers can still make complaints about firms which no longer operate, although it is less likely that they will receive a refund as they will have to apply directly to administration firms. Although, if their complaint is successful and they still owe debts this could mean they have to pay back less so it's still worth complaining.
Lender 247Moneybox closed shop last week, and QuickQuid, WageDayAdvance and Juo Loans also called it a day earlier this year, plunging millions of customers into financial uncertainty.
Many of them buckled under the influx of compensation claims over irresponsible lending.
Customers who still owe PiggyBank cash are being urged to continue making their payments as normal.
Otherwise, they risk damaging their credit score or being hit with additional charges as a penalty for late or missing payments.
Borrowers who have already submitted compensation claims, and those who are yet to, will be added to a long list of creditors that are owed cash.
Both are unlikely to get a payout as the bigger lenders like banks and investors will be paid first.
How to claim compensation from payday lenders
IF you think you are owed compensation from a payday lender then here's how to claim according to money blogger DebtCamel:
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 me 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.
Look back through your emails, bank statements and credit reporter for evidence.
You'll need to write a formal complaint letter to each lender explaining how you were irresponsibly lent to and include the evidence.
You'll need to cite "unaffordable loans" and ask for a refund of the interest and charges you paid, as well as the 8 per cent Ombudsman interest on top.
Make copies of all of the evidence before sending in case anything happens to them.
Also ask for the loan to be removed from your credit record.
You can find a letter template here.
Wait up to eight weeks to hear back from them. If you're not happy with the answer, or they don't get back to you, contact the Financial Ombudsman.
Wonga customers in a similar position have reported that they've since received compensation payouts even after it went bust but they have been much smaller than anticipated.
Borrowers are also being urged to stay alert to scammers who may be trying to cash in on the company's demise.
Customers are advised to ignore email and phone calls that ask them to change the bank account that they normally make repayments to.
Instead, they should contact the customer help team immediately on firstname.lastname@example.org or call 0800 2061560.
Administrators Shane Biddlecombe and Gordon Johnston haven't rules out the sale of the company to pay off some of its debts.
In a statement on the PiggyBank website, administrators said that they "will commence work" to repay those who the company owes money to.
It added: "The Company remains regulated by the Financial Conduct Authority who will continue to supervise the joint administrators’ activities throughout the administration process."
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