Customers to receive compensation after payday lender's collapse

Hundreds of customers who were mis-sold payday loans by WageDay Advance will receive some compensation after the lender collapsed earlier this year.

The lender, which had around 800,000 clients before going into administration in February, went under after being hit by a wave of compensation claims for mis-sold loans.

The company has started to contact former customers that are owed compensation and explaining their situation; however, the recipients must reply in order to claim the compensation that they were entitled to.

Existing borrowers will be ok if their outstanding debt is less than the redress that they are due. Their outstanding balances will simply be reduced accordingly, so that they will have less to pay back.

But according to the Independent, those who are still owed money after subtracting the sum of their compensation from their balances will not be fully restituted for having been misled. Instead, they will become unsecured creditors and receive a fraction of their full compensation.

According to the company’s claims calculator, current and former customers could be entitled to as much as £223m in compensation, including interest, with an estimated 330,000 people expected to still be eligible to claim compensation.