Troubled lender’s future uncertain as it falls to sizeable loss
Morses Club, the Nottingham-based sub-prime lender, has slipped to a major loss for the six months to August 27.
The troubled firm fell to a loss of almost £21m for the period – against a profit of £1.8m last year.
This is against a backdrop of Morses Club being forced to “take steps” to constrain lending in key areas despite its existing £25m funding facility remaining in place until 31 March.
Morses Club again warned that if it could not defer debt payment or secure new funding beyond that date then “significant doubt” would be cast on the company continuing to trade.
The news follows warnings that Morses could enter insolvency unless it agrees a Scheme of Arrangement after it suspended processing claims made against its “unaffordable” loans.
The company has now called in EY to help secure funding for the medium-term.
Gary Marshall, CEO of Morses Club, said: “We continue to face the ongoing challenge of customer redress claims, the processing of which has been paused since 11 August. We are working tirelessly to deliver the detail behind a potential Scheme of Arrangement and remain deeply committed to the sector.
“We are focused on securing the future of the group and are reshaping the business to help the company move forward from the challenges it currently faces. We continue our discussions with the Financial Conduct Authority to progress on a potential Scheme of Arrangement. Any potential Scheme of Arrangement would remove the uncertainty of continued redress claims and remove the risk of ongoing liabilities with regard to volatility in the level of complaints.
“I remain confident that we can work through this in a constructive way, as it is vital that our customer demographic continues to be served by a provider which understands the market and operates in a socially conscious way.”