What happens when a financial institution fails to properly assess a borrower’s ability to repay a loan? In many cases, the borrower is left in a financially vulnerable position, struggling to make ends meet while being bogged down by insurmountable debt. This is precisely the situation that had arisen with The Money Shop, a short-term lender based in the United Kingdom.
Although the company had been operating for more than 20 years, it was revealed that between the years 2011 and 2014, The Money Shop had been lending money to individuals without properly assessing their ability to repay. This caused a multitude of financial hardships for customers, many of whom found themselves saddled with exorbitant amounts of debt and no way to pay it off.
In response to this crisis, The Money Shop was ordered to pay out compensation to those affected by their improper lending practices. This article will explore the details of The Money Shop Reviews compensation and what you need to know if you were affected as a customer.
The Story Behind the Compensation
The Financial Conduct Authority (FCA) began investigating The Money Shop in 2014 after it was discovered that the company had been lending money to borrowers who could not afford the repayments. As a result, many people were forced to take out additional loans just to meet their monthly payments, leading them further into debt.
In 2015, The Money Shop voluntarily ceased lending to new customers and started a review of their lending practices, which led to the agreement to compensate those who had been affected by their irresponsible actions.
The Money Shop Reviews compensation comprises two parts – redress and goodwill payments. The redress payment is designed to compensate those who suffered loss as a result of an unaffordable loan, while the goodwill payment is intended to recognize the distress caused to the borrower.
The Compensation Process
The Money Shop has appointed an independent third-party company, EY, to manage the compensation process. Those who believe they may have been affected by The Money Shop’s lending practices can submit a claim for compensation.
To be eligible for the compensation, the borrower must have taken out a loan from The Money Shop between April 1, 2014 and August 31, 2018, and suffered financial hardship as a result of the loan. The borrower must also have paid off the loan either partially or in full, or have entered into a repayment plan.
If the borrower meets these criteria, they can submit a claim through the dedicated The Money Shop Reviews compensation website. The claim will be assessed by EY, who will then decide whether the borrower is eligible for compensation.
The Compensation Amount
The amount of compensation that is awarded will depend on the individual’s circumstances and the extent of the financial hardship they have endured. The Money Shop has set aside a total of £18 million to cover the cost of compensation, but this amount may be increased if more customers come forward.
Those who are eligible for compensation can expect to receive a redress payment for the amount they overpaid as a result of an unaffordable loan. They may also be entitled to a goodwill payment, which is typically £200 to recognise the distress caused.
The Future for The Money Shop
The Money Shop is not the only short-term lender that has been subject to scrutiny by the FCA. Other lenders have also been criticised for their lending practices and have been ordered to pay compensation to affected customers. However, The Money Shop is the largest lender to pay compensation to its customers, and the amount of compensation paid out may continue to rise as more borrowers come forward.
As for the future of The Money Shop, the company has not restarted lending to new customers and has announced that it will close down its entire network of high street stores by the end of 2019. The decision to close the stores was made before the compensation scheme had been agreed, and it is not related to the compensation payments.
The closure of the stores will undoubtedly impact the 500 employees that work for The Money Shop, and many have expressed concern about what this means for their jobs. However, The Money Shop has said that it is working to ensure that employees are treated fairly and that they are working with other firms to provide alternative employment.
Conclusion
The Money Shop Reviews Compensation is an important step towards holding lenders accountable for their actions. By compensating borrowers who have suffered financial hardship as a result of the company’s irresponsible lending practices, The Money Shop is showing that it takes its responsibilities seriously.
If you believe that you may be eligible for compensation from The Money Shop, you can submit a claim through the dedicated claims website. The process is straightforward and managed by an independent third party, so you can be sure that your claim will be assessed fairly.
While lenders have a responsibility to ensure that borrowers can afford to repay their loans, it is ultimately the borrower who takes on the debt. As such, it is important to think carefully before taking out any form of loan or credit, to ensure that you can afford to make the repayments on time and avoid financial hardship.