Morses Club in Administration – What does this mean for you?

Are you wondering why Morses Club has gone into administration? You’ve come to the right place! Every month, over 170,000 people visit this site seeking advice on debt solutions.

In this article, we’ll address the following questions:

1. Why has Morses Club gone into administration?
2. What does Morses Club closing down mean for you?
3. What is the impact on Morses Club customers’ credit scores?
4. What should you do next?

Dealing with debt can be quite concerning, and it’s common to feel unsure about seeking help. In fact, Citizens Advice revealed that 60% of adults facing financial difficulties hesitate to seek assistance.¹

If that’s your case, don’t worry — you’re not alone. We’re here to help you figure things out.

Why has Morses Club closed?

Morses Club was closed down, along with its subsidiary (Dot Dot Loans), on the 17th of November, 2023. 

Morses Club and its subsidiary, Dot Dot Loans (also known as Shelby Finance Ltd.), were the leaders in the lending industry, providing thousands of people around the UK with ‘quick’ doorstep loans.

Many saw the company as a solution to the debt during the cost-of-living crisis as these loans could help tide over any outstanding payment .

But these doorstep loans came with very high-interest rates and a huge risk for both the borrower and, ultimately, the lender. 

Affordability Claims Causing Morses Club’s Downfall:

With the ridiculously high-interest rate of 343% APR on a one-year loan and an average of 1590.93% interest rate for a 26-week loan, Morses Club and its subsidiary relied on people who were already in a vulnerable situation to take on these interest rates to pay off upcoming bills they were struggling with. 

However, Morses Club didn’t take into account that when people took on more than one of these loans, they could also make claims to get out of their debt with their company – known as an affordability claim. 

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According to StepChange, a loan company should ‘take steps’ to ensure that you can pay any borrowed money back through an affordability check.

They go on to say, ‘If they lend you more than you can afford to repay, you can make a complaint against them for irresponsible lending’. 

Customers who repeatedly borrowed money from Morses Club were more likely to win these affordability claims because the necessary checks weren’t taken to ensure that these borrowers could realistically pay the money back.

This eventually led to the downfall of the lender giant. 

What does it mean for you? 

There are many people who have found themselves struggling with overwhelming amounts of debt from excessive use of payday loans with high-interest rates, and they need all the help they can get.

How can Morses Club closing down help with this?

Compensation for Morses Club Customers: 

While there is a chance for Morses Club customers to receive compensation for the lender’s closure, it will, unfortunately, be a very small amount of money. 

The claims placed against Morses Club exceed £130 million, but they have only allocated £1.2 million for compensation for those who have been wronged by the company.

This equates to only 0.9p per pound in compensation.

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Impact on Morses Club Customers’ Credit Scores:

There is a bonus for those who have already paid off their Morses Club loans, and are now wondering what will happen to their credit history. 

If you’ve already paid off the loan, then the evidence could be removed from your credit report now that Morses Club has gone into administration.

This means that there would be no remnants of your doorstep loan, and your credit score may improve because of this!

Reduced Debt Payments for Morses Club Customers:

If you are a Morses Club customer who has not yet repaid your loan, then there is still the potential bonus that your outstanding debt could be reduced.

This may apply to those who have submitted affordability complaints against the company and may be owed compensation for the trouble you have experienced.

Instead of being paid out money from the closure, you may receive a reduction in your current debts. 

What should you do next?

1. First of all, don’t stop paying back the money – you still owe the funds! Stopping payments will negatively impact your credit score. 

2. Additionally, it is highly likely that a debt collector (Lantern or Lowell Financial) will have bought your debt, and this will still need to be paid back. You should be notified of this by a letter from the new debt owner. 

3. You can make an affordability claim if you believe you have been wrongly impacted by Morses Club, even though they are in administration. The complaint will still be registered, and you haven’t lost the right to complain about the shutdown company. 

With this complaint, you may be able to either get a reduced debt (if you still owe money), or the mention of Morses Club removed from your credit report.  

Debt Solutions Comparison

As mentioned earlier, it’s likely that a debt collector bought your debt, and you still need to repay it. Therefore, if you’re facing difficulties with the payments, it’s worth considering a debt solution.

I’ve put together this table to help you understand the different debt solutions available and their effects on your credit score and assets.

A look to the future of loans…

With this continued awareness around the negative impacts of fast loans on the UK population, particularly with unaffordable debt, there is now an increasing possibility of the government reviewing and cracking down on all types of quick unsecured loans – especially the modernised structure of the Buy-Now-Pay-Later loan. 

It is important that affordability checks are used on all types of loans and that people aren’t able to or encouraged to, seek out these dangerous loans with incredibly high interest rates. 

• Are Morses refunding customers?

Those who submitted affordability complaints to Morses Club before they went into administration may receive small amounts of compensation for the company’s involvement in the UK population’s unfathomable debt. 

However, people are no longer allowed to ask for compensation. You may still submit affordability claims, and either potentially have the Morses Club history removed from your credit report or your debt slightly reduced/cleared, depending on your circumstances. 

• What is a doorstep loan?

Doorstep loans are a type of personal loan used in emergency situations for small amounts of money. They are a short-term loan. They are expected to be paid back weekly, and the repayments can be collected from your home by a company representative, or many companies are now moving their repayment systems online. 

• What will happen to the Morses Club app?

As far as we are aware, the Morses Club app is still accessible for existing customers who wish to manage their repayments and check their outstanding balances. You will still need your Morses Club login. 

• What will happen to the Morses Club Scheme?

The Morses Club Scheme, which was set up at the end of May 2023 to compensate customers with unaffordable loans (who made affordability claims), is over now.

The official closing date for claims was originally the 30th of November, and according to Morses Club, they contacted all of their customers about the scheme. 

With only a few days left of what would have been the complete scheme, most of the claims have already been decided.

However, this does mean that those who left their claims until the last minute will have missed out on the chance for compensation. 

References

1. StepChange – Credit safety net report