Payday loan firm Sunny on the edge of administration – how it affects your repayments

PAYDAY loan firm Sunny is on the edge of going into administration, affecting thousands of customers.

The high-cost credit firm blamed the impact of the coronavirus and a continued clampdown on the payday loan sector.

Borrowers are being urged to continue making payments like normal though, otherwise they risk damaging their credit score or being hit with additional charges as a penalty for late or missing payments.

At this stage, it doesn't mean that the lender has gone bust – it is looking at ways that will help the business survive.

But if it does go bankrupt, it would be the latest in a string of payday lenders calling it a day following the demise of one of the UK's biggest short-term lender, Wonga, in August 2018.

Since then, Piggy Bank, 247MoneyBox, QuickQuid, WageDayAdvance and Juo Loans have also called it a day, plunging millions of customers into financial uncertainty.

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.

Many of them buckled under the influx of compensation claims over irresponsible lending.

Latest figures from Sunny's annual accounts for the year ending in December 2018 show that it was one of the biggest payday lenders with a fifth of the market and took on more that 104,000 new customers throughout the year.

But in 2020, it saw a significant drop in the the number of new customers, only taking on 10,000 in the first quarter compared to 30,000 during the same period last year.

Its parent company, US-based Elevate Credit, Inc., put this down to "the ever stringent customers affordability regulations in the UK".

Despite this, at the time the firm said that it "remained hopeful" that it could work with regulators to find a way to build the business back up.

But in the last half of 2019, the Financial Ombusman (FOS) – which deals with consumer disputes – received 2,897 complaints about Sunny.

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.

The FOS upheld 76 per cent of them – double the average uphold rate across all of the cases reported to the ombudsman, which stood at 36 per cent during the same six months, according to Debt Camel.

"Covid-19 will have been a problem for Sunny, like all lenders," said campaigner Sara Williams, who runs Debt Camel, "but I think the main reason they are in trouble is the cost of paying refunds to customers for unaffordable loans.

"If Sunny goes into administration as expected, these customers will lose out, as they are likely to only receive a small amount of the compensation they are owed."

Customers who have already submitted a claim may only get back a portion of what they are owed because the company might not be able to afford to pay you in full.

The unaffordable loans may also be removed from your credit record.

Borrowers who think they were irresponsibly lent to but haven't made a complaint yet should do so soon.

This is because when a company does fail, your compensation claim will be added to the back of a long queue of people the business owes money too and big investors and lenders will be paid first.

A spokesperson for Elevate Credit International – the UK branch of Elevate Credit, Inc – told The Telegraph: "Unfortunately, due to the ongoing economic uncertainty as a result of coronavirus and the continued regulatory pressure on the business, we have had to take the difficult decision to give notice to appoint ­administrators."

Last year, an investigation by The Sun found that payday lenders are still charging double the amount lent to them by a payday lender.

Our Stop the Credit Rip-Off Campaign has also seen the FCA crack down on "exceptionally high" rent-to-own products, as well as make a raft of changes to overdrafts and introduce stricter rules for doorstep lenders.

 

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