Administrators will soon notify clients and creditors of the collapse of the high-cost short-term lender.
Anyone with an outstanding loan should continue to pay their balance as usual.
Customers with abuse sales claims are classified as unsecured creditors, so they are unlikely to receive the compensation they are owed.
It was announced on the MYJAR website and on the Financial Conduct Authority (FCA) website that the company had appointed directors on December 22.
The company said external factors put financial pressure on the company and hampered its ability to negotiate, meaning it had no choice but to pull out.
As with all payday loan company meltdowns, customers who still have an outstanding loan balance must keep paying it.
While admins aim to let customers know as soon as possible, the Christmas holidays will slow this process down, so customers shouldn’t be concerned if they don’t hear anything immediately.
The external factors that the company says led to their collapse are likely due to the number of complaints they have received in recent years.
The mis-selling of loans to clients who could not afford them became a problem in the payday lending industry, and MYJAR was one of many companies struggling with them.
During the first half of 2020/21, the Financial Ombudsman Service (FOS) received 849 complaints regarding MYJAR. During the same period, they resolved 55% of all claims involving MYJAR in favor of the plaintiff.
Although this rate is far from the highs of 87% of Amigo Loans out of 1,163 claims during the same period, it still means that MYJAR was ordered to pay compensation to more than half of the claimants.
Amigo Loans just announced that they were looking to cap compensation payments in an effort to save the business, but the owners of MYJAR believed their only choice was to appoint directors.
Over the past year or so, we’ve seen Peachy and Uploan crumble, as well as the big payday lender Sunny over abuse complaints.
Avalanche of abusive sales
Search for any payday loan company through a search engine and the results will be full of claims management companies (CMCs) stating they can help clients build a case if they feel they are in pain. sold a loan from this company.
CMCs handle the entire claims process for the client, taking a percentage of the claim as payment as well as a lump sum, and they are probably best known for helping clients recover Payment Protection Insurance (PPI ) poorly sold.
Today, however, one of their main targets is the market for high cost short term loans and clients who may have been mis-sold when they should have failed affordability checks and denied the right. credit.
Amigo explained that a high level of complaints they received in 2020 came from CMC, and it can be assumed that a significant proportion of the complaints MYJAR faces are from similar sources.
Customers who have open complaints against the company will be identified as unsecured creditors, so they will be low on the priority list when it comes to getting what is owed to them.
When Wonga collapsed in 2018, it took administrators 18 months to finalize the settlements, and claimants received only 4.3% of the compensation promised to them before the collapse.
Unfortunately, it is likely that MYJAR’s plaintiffs will face a similar expectation for a much lower payment than they expected.