Administrators at KPMG have been emailing Sunny Loans payday customers who were mis-sold premiums to claim the compensation before January 2021. The exercise began this week and is expected to continue for a few more weeks. KPMG is sending the emails to former Sunny customers who were missold on payday loans.
The action comes after the credit company Sunny fell into administration in June 2020. Sunny is a brand name of Elevate Credit International Limited. Some of the company’s loan book was sold to Perch capital in October while another significant portion was written off. The company bust in June 2020 to the surprise of many.
While going through the remaining loan book, KPMG found out that of 700,000 customers listed by the firm, 500,000 were mis-sold premium by the lending firm. It is this over half a million customers who should submit compensation claims.
KPMG will keep on mailing these clients and inform them to make claims. The claims are to be submitted from now and the latest by the end of January 2021. Claimants who had their cases handled by the Financial Ombudsman but are yet to receive payment should also claim compensations with this batch.
Payments to the claims are likely to be paid out earliest in the spring of 2021. The number of dividends paid to the clients will depend on the number of claims lodged in the system. However, KPMG reckons that the payments made out to customers will be dismal and only expected to be less than 1%.
It is not all gloom for those who have lost money or gotten blacklisted for being mis-sold loans. All who have been mis-sold instant payday loans can rest free knowing that the first five missed payments will be taken off the books while all subsequent loan notices will be deleted entirely.
The victims who have suffered an adverse credit history because of Sunny’s bad practices can have a new lease of life after their records’ clearance. The move is a significant boost to those struggling with credit access due to a history of loan defaulting with sunny. The clearance grants them prospects of accessing loan facilities they need to improve their lives.
The high-interest rates have made it impossible for most clients to clear their loans n time, and many ended up defaulting. In most cases, clients were given loans that were just unaffordable. That led to the high loan default rates.
Payday loans UK have been ripe for disaster, and this is not the first time something fishy is found with payday loans. Sunny is just one in a list of high-ranking payday firms that have collapsed in recent times.
Most of the collapses have been due to customer complaints of misselling high-cost loans over the short-term period. Most of these loans were too expensive for the clients, and if diligence were to be exercised, the loans were not to be granted in the first place.
The most notable example in recent memory is Wonga’s collapse in 2018 and the subsequent fall of QuickQuid and WageDay Advance. Most payday loans are too expensive for the common folk, and therefore, most people default the loans rather than repaying them.
Sarah Williams, a debt adviser at Debt Camel blog, has noted that there has been a lot of data emerging on the missell of the payday loan from Wonga collapse. A lot needs to be looked at to ensure that fairness and sanity reigns in the UK’s payday loans market. As it has emerged from the public and the Financial Ombudsman’s coordination of efforts, it is possible to notice when a lot of the population has been duped.
There are several regulations in the UK dealing with payday loans bad credit, but from the list of high-profile lenders who have failed due to misselling of these loans, it time to have a keen look at laws. Some argue that rules are not enough to keep people from being lured into unaffordable debt.
In this respect, it is good to sensitize the public on sound financial practices in taking debt. However, more weight needs to be put into regulation to ensure that more people are not duped into high-cost, short-term loans with sky-rocketing interest rates.
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