Lender’s future in the balance as it appeals to customers over compensation plans
Morses Club has begun the process of inviting customers to vote on its Scheme of Arrangement proposals after admitting it has received “an increased volume of complaints.”
The troubled sub-prime lender will launch a compensation fund of “at least” £20m which will be shared between creditors with valid claims if the arrangement goes ahead.
The Nottingham-based company appeared in court last month after the FCA said there was “considerable uncertainty” surrounding its ability to secure the funds it needs to compensate claimants.
Last year, the firm suspended processing claims made against its “unaffordable” loans and issued repeated warnings that it could enter insolvency unless it brought forward a Scheme of Arrangement.
In February, shareholders voted to de-list the company from the London Stock Exchange in a bid to avert what looked like its imminent collapse.
Morses has since presented the FCA with revised plans after the regulator said there was “a real risk that customers [would] not receive any form of redress payment whatsoever” under its initial proposals. The body said that, had the company been allowed to proceed with its original plans, “customers could be in a worse position than if Morses Club went into administration.”
Changes to the way Morses communicates with its customers are a key part of the reworked proposals.
The company says the amount of money it could draw upon to pay cash compensation in the event of insolvency would be “significantly less” than the pot it would be able to access under a Scheme of Arrangement.
It says creditors will have 6 months to make a claim if and when the Scheme becomes effective, and has set a deadline of November 2023 for customers to vote for or against the proposals. The firm said it would communicate the exact closing date “during the next stage of the process” following a Sanction Hearing later this month.
Compounding its considerable woes, Morses confirmed it had received a growing number of complaints from customers who allege that it “failed to complete the right checks” when their loan was provided to them.
