Payday Lender Piggybank Collapses Into Administration
The payday lender Piggybank has collapsed, leaving around 45,000 customers in limbo over repayments and compensation.
Back in July, Piggybank were banned from offering new loans to customers after the Financial Conduct Authority (FCA) raised their concerns about Piggybank’s poor affordability checks.
This meant the lender, who were one of the UK’S 10 largest payday operators, were forced to make sure they were lending to customers who could pay back the loans.
The firm specialised in lending cash amounts between £100 and £1,000 to borrowers with poor credit, and the short-term loans were required to be paid back between seven days and five months. They could charge up to 1,698.1 per cent APR interest rates per loan.
Administrators did not go into detail about the cause of the company’s collapse, and it is unclear whether customers will be compensated at this time.
Piggybank’s collapse comes just weeks after the UK’S largest payday lender, CashEuroNet, went into administration in October, and weeks later 247MoneyBox, another payday lender, also collapsed. The sector is still recovering from Wonga’s collapse in August last year.
Since then, we’ve seen The Money Shop collapse due to complaints, and more recently pawnbroker H&T announced they will stop granting loans while the FCA conduct an investigation.
However, these lenders going into administration is beneficial to the UK as payday loans and high interest short term loans are incredibly expensive and it’s easy to get stuck in a repeat cycle and become vulnerable when borrowing these loans.
Millions of payday loan customers may be due refunds without realising. Compensation is often given if the loan was mis-sold or if affordability checks weren’t thorough enough.
Even if you’ve paid off your debts you may be able to claim a refund if you struggled to repay the loan at the time. Even if the firm no longer operates you can still make a complaint about the company.
If you think you are owed compensation from a payday lender you’ll need to prove you couldn’t afford to take out the loan at the time of borrowing it. If you struggled to pay your bills or other debts then you were irresponsibly lent to.
You may also be entitled to a refund if you made any late repayments or you took out consecutive loans, as this is proof that you couldn’t afford to take out a new one.
You’ll then need to write a formal complaint letter to the lender explaining how you were irresponsibly lent to and include your proof. Make sure to ask for the loan to be removed from your credit record.