Morses Club went into administration in November 2023.
Morses Club was the largest doorstep lender in the UK after Provident stopped lending in 2021. See Morses Club goes under for details about why it failed.
In March 2024, the administrators have sold or written off all outstanding loans. This article looks at what has happened, what happens to customers’ credit records, and whether customers may get any redress for unaffordable lending.
How many current loans are there?
When Morses went into administration in November it had about 68,000 current loans. Roughly a third were in default.
Morses loans were typically between £300-1.500 and most recent loans were short terms for 3 or 6 months. Some of the current loans will probably have been repaid by now.
On 6 March 2024, the administrators announced that they have:
- sold some loans to Lantern;
- written off all the remaining loans
- closed the Morses Operations Team. It will no longer be able take phone calls or emails from customers or answer any queries.
Loans written off
Good news!
People with loans that have been written off have started receiving the following email from Morses:
We have recently conducted an account review and are pleased to inform you that we have taken the decision to write off your outstanding balance.
This means as of today you will no longer be liable for this amount and your balance has been reduced to zero.
We will notify the credit reference agencies of our decision. Your credit file should shortly be updated to show as partially satisfied with a zero balance.
This is good news as you will no longer be asked to make payments.
The effect on your credit record
Morses are adding a marker on your credit account to show that the loan is “partially satisfied”. This is visible to other lenders you may apply to but it does not affect your credit score. If your Morses debt already shows missed payments or a default, there is no reason to be concerned about this partially satisfied marker.
When there is a default date on the credit record, it will drop off six years after that default date. If there is no default date, just payment arrears showing, then the record will stay for 6 years after it has been written off. So it is in your interest that the default date should be as early as possible as this means the record will drop off sooner. The credit reporting rules say that a default should be recorded when an account is 3-6 months in arrears.
There may be problems with your credit record – perhaps some dates are wrong, your payments have not been accurately recorded, or Morses failed to add a default as soon as it should have.
If you think there is a credit record problem, you can no longer ask Morses Customer Services to correct it. Instead, you can ask the Credit Reference Agencies to correct this. See Correct credit records by “suppressing” them which explains what to do.
Loans sold to Lantern
Lantern is a debt collector. If your loan has been sold (the administrators use the legal phrase “legally assigned”), Lantern will send you an email about this.
You don’t have any right to object to this sale. Lantern now has the same rights to be paid by you as Morses Club had. And Lantern will update your credit record from now on.
If you are still paying Morses, you should stop and instead set up payments to Lantern. If you can’t afford the repayments, talk to a debt adviser.
I asked the administrators about affordability complaints and the loans sold to Lantern. They say :
the administrators proactively applied the Scheme’s Claims Methodology to customers’ loans to determine whether loans were affordable and/or sustainable or not and, where required, adjusted customer’s loan balances under the same criteria that was originally agreed in the Scheme even if no claim had been made. Only outstanding loan balances after this redress was applied was available for sale to Lantern and as such unaffordable lending complaints should have been addressed.
However, customers are still entitled to make a complaint and can do so by contacting complaints@lanternuk.com at Lantern. Lantern is now responsible for dealing with complaints in the first instance where they have acquired a customer’s loan.
So it may be that your balance now owed to Lantern is lower than the previous Morses balance if your loan was considered to be unaffordable.
What about refunds for affordability complaints?
The administrators say that there will not be any money to pay unsecured creditors with a claim in the Administration – this includes customer who should be owed money for unaffordable lending claims.
However, there may be a small amount of money that can be distributed from the pot that Morses put aside when it set up the Scheme that has failed. The administrators say:
- a dividend may be made from the Early Termination Fund (“ETF”) to customers with redress related claims. Any distribution is expected to be less than 0.9p in the £ (i.e. if you have a valid redress claim of £1,000, you will not receive more than £9 and it may be that you receive £nil).
- We are currently seeking Court guidance on the approach to be adopted to distribute the funds from the ETF and we advise customers continue to monitor this website for further updates.
So any cash refunds paid are likely to be tiny.
This is very disappointing for customers who had been told they had an upheld claim in the Scheme.
UPDATE on refunds (June 2024)
In the June 2024 update, the administrators said:
“The Joint Administrators consider that based on their proposed strategy there are sufficient funds in the ETF to allow a distribution to beneficiaries and have determined the average distribution to be made to valid scheme claimants to be circa £9.28 and are seeking to complete this in late 2024. However, this strategy remains subject to comment from the FCA and approval of the Court and therefore is subject to change.”
In other words, people will get very small refunds and they won’t be paid for many months.
