HIGH cost lender TFS Loans has gone bust after running out of cash due to customer refund requests.
The guarantor loan firm has appointed administrators after it was unable to meet the cost of compensating customers following unaffordable lending claims.
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Opus Restructuring, which was was hired as administrator this week, said “the main causes of the failure of the business are rooted in unaffordable lending”.
This led to complaints to the Financial Ombudsman Service and resulted in redress payments being awarded.
TFS stopped lending in February 2021 “due to deficiencies in its processes and complaint handling procedures”.
It ran out of cash in January this year, when it was unable to meet customers’ refund requests.
Guarantor loans are when someone else – for example a friend or family member – agrees to pay the money back if you can’t make the payments.
The company charged APR of between 29.9% and 39.9%.
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Other firms in the sector have gone bust in recent years including payday lender Wonga and doorstep loan firm Provident.
As well as the influx of customers, TFS also blamed the pandemic on its decline, due to a drop off in lending during lockdown.
Opus said: “It has been necessary to place TFS into Administration in order to protect the business and the interests of creditors.
“We would like to stress to customers that this does not change the terms of any loans they have taken out with TFS Loans Limited.
“It is important that all customers must continue to repay their loans in accordance with the terms of their agreements, as continuing to do so will have a positive impact on their credit ratings.”
What are my rights if I’m a TFS Loans customer?
The administrators Opus Restructuring have said customers should continue to repay their loans.
We have asked what the administration means for customers with claims against the lender, and we will update this page when we know more.
It’s also not clear whether any new claims can be made.
If you’re waiting for a compensation payment from TFS, you should contact the administrator.
Opus said: “The Opus Administration team will be providing detailed communications to all customers and creditors of the company once they have completed a detailed assessment of the business.”
In similar situations, claimants have not received the full amount they were owed.
For example, Wonga victims were given just 4p for every £1 they were due to be paid.
Consumers should also be wary of scammers trying to take advantage of the situation.
TFS said it will never ask for your bank details over the phone.
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