Half a Million Sunny Payday Loan Customers Could be Owed Redress
More than 500,000 customers of collapsed payday lender Sunny Loans could be owed refunds for mis-sold loans, but they’re likely to receive just a fraction of what they’re owed.
Sunny offered loans of between £100 and £2,500 at a representative APR of 1,267%, capped at 0.8% a day.
The firm fell into administration in June, with a spokesperson for the company blaming the economic uncertainty of the coronavirus crisis and “continued regulatory pressure.”
Sunny had been subject to tougher scrutiny from regulators, including rules requiring stricter affordability checks and price caps on loans, and to a surge in complaints from claims management companies—the same forces which toppled notorious payday lender Wonga in August 2018 and numerous other high-cost lenders.
Sunny customers have alleged that they were mis-sold loans, including those which they couldn’t afford and never should have been granted.
Sunny’s parent company Elevate Credit International (ECIL) have built a “claims calculator” to identify customers who were potentially mis-sold loans and to determine how much they could be owed in redress. 500,000 of the firm’s 700,000 customers qualified.
KPMG, appointed as administrators of ECIL in June, have now said they will email those customers in the next few weeks, inviting them to submit a creditor claim by 31 January 2021.
However, given the huge number of potential claimants, each could receive very little or nothing at all.
KPMG said: “As a result, if a very high volume of claims and queries is received, it is likely that the operating costs of responding to queries and processing and adjudicating claims will become so high that no funds will be available for a dividend to be paid to creditors.
“If a lower volume of claims and queries is received and a dividend can be made, the dividend is likely to be a very low percentage of your claim. Whilst the dividend will depend on the volume of claims and queries received, we estimate that any dividend payable could be less that 1p in the £ and that any payment would likely be made in Spring 2021.”
This tracks with the settlement of claims for other payday loan companies. 385,000 customers mis-sold Wonga loans received just 4.3% of the compensation they were owed and thousands of customers of Wage Day Advance received just 5.68p for every £1 they were owed.
Debt advisor Sara Williams, who runs the Debt Camel site, said: "Since Wonga went under, the figures have been emerging about the massive scale of payday loan mis-selling.
"These show how ineffective regulation was at preventing so many people being trapped in unaffordable debt for so long."