Emma RadmoreFOS has updated its website to reflect the court’s approval for a scheme of arrangement between Morses Club and its creditors. Morses Club was the UK’s largest doorstep lender, which had increasingly faced complaints about its loans on the basis it had failed adequately to check the affordability and sustainability of the loans. In March 2022, by which time it had been required to meet separate fixed fees payable to FOS for its consideration of complaints, it agreed with FCA that it could pause paying claims as it would otherwise become insolvent. It proposed a scheme which would allow claimants to be treated equally. Money would be injected into the scheme which would provide an estimated return to creditors of 20p in the £ as opposed to the 1-3p expected in insolvency. FCA was concerned at whether the scheme would actually be put in funds, but following agreement from Morses Club to put funds into a trust account, it did not oppose the scheme. The court noted that FOS voted against the scheme, but it gave no reasons and had not otherwise appeared to oppose it.
The scheme will affect consumers who received a loan from the club between 1 April 2007 and 2 August 2022 and made a claim for redress on or after 11 August 2022 on the grounds of the loan being unaffordable. FOS notes that consumers will be able to make their redress claims directly through the scheme and that as a result it is not appropriate for FOS to consider complaints that fall within the scheme further. It will continue to consider complaints that were made to Morses Club before 11 August 2022 in relation to loans made before 2 August 2022, complaints about unaffordable lending after 2 August 2022 and complaints that are not related to unaffordable lending.