Payday loan firm Cash Genie won’t pay £20million owed in compensation to customers
The payday lender's liquidators have revealed that Cash Genie no longer has the money to meet claims in full
BORROWERS owed money from failed payday lender Cash Genie are unlikely to get the full amount they're due the firm's liquidators have announced.
Back in 2016, Ariste Holding Limited, trading as Cash Genie, voluntarily entered into a so-called "solvent liquidation".
Despite shutting shop, the firm said it still had the money to repay the £20million in redress it had been ordered to pay by the financial watchdog in 2015 to 92,000 customers for unfair practices.
The Financial Conduct Authority says 100 per cent of balance write-offs and 76 per cent of cash redress was paid out by Cash Genie before it went into liquidation.
Meanwhile, the firm's liquidators, Steven Law and Nigel Millar of RSM Restructuring Advisory LLP, say that more than £535,000 has been paid out to people owed money by the firm since it went under.
But this month, the liquidators have revealed that the lender no longer has the money to meet remaining and new claims in full.
It told us: "When the company trading as Cash Genie was placed into liquidation in 2016 both the directors and liquidators believed there would be sufficient funds to pay creditors.
"But in recent months, the company has received a drastic increase in claims, due in part to coverage of similar cases which has made more creditors aware that they may have a potential claim.
Are you due a payday loan refund?
MILLIONS of payday loan customers may be due refunds. 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 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 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 you have to pay back less so it's still worth complaining.
- Affordability is different to mis-selling
Lots of firms claim to help payday loan customers who were mis-sold loans. Affordability has the potential to be a much bigger issue, as stricter affordablity checks were introduced in 2015 by the city watchdog the Financial Conduct Authority. This means that many loans were offered to customers who could not afford to pay them back.
"Consequently, the funds available are now insufficient to settle all claims in full including statutory interest.
"As a result the joint liquidators have announced that they are intending to move from a solvent liquidation process into an insolvent liquidation process, known as a creditors’ voluntary liquidation.
"Creditors can still submit their claims in the usual way, but it is now unlikely that new claims will be paid in full."
Affected customers can call the RSM contact centre on 0333 155 8608 to register their claim.
RSM says it can't say how much borrowers may expect to receive, but adds that it hopes to provide payments to successful claims within six months.
Debt adviser Sara Williams, first highlighted the issue after readers of her emailed her letters they'd received from the liquidators.
She says she's not heard of anyone receiving payments from the firm since March this year.
One reader, called Carl, commented on the Debt Camel website: "I had a case agreed upon in March and was told that I was due £180 plus interest, but it would be paid periodically when funds were available.
"Are you aware of any payments made since March this year as I have received none?"
Another reader, called Mr D, added: "Got the letter today. Bit of a kick in the teeth as I only got my adjudicator decision from the Financial Ombudsman Service last week and the company had agreed to £720 refund plus stat interest.
"Will return the form and see what I get!"
More on loans
Payday lenders were warned only last month about their practices following a soar in the number of complaints about them lending to customers who cannot afford to pay back debts.
In August this year, Wonga collapsed into administration following thousands of compensation claims.
But hundreds of thousands of people are set to save money from a cap on rip-off rent-to-own fees, thanks to The Sun's Stop the Credit Rip-Off campaign.
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