Business

Morses Club shares fall 40% due to customer complaints scheme

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Shares in subprime lender oorstep Morses Club fell 40% in early trade this morning after it announced it would enter into a “potential scheme of arrangement” to deal with customer compensation claims that “may jeopardize the future of the group”.

He said that the key purpose of the potential scheme, which has been identified by the regulator Office of Financial Control (FCA) will treat all customers equally and “settle relevant compensation claims” arising from customer complaints within a specified period.

It is understood that the additional amount is assessed £45m is expected to be set aside in its accounts for the 2022 financial year as an exceptional item to deal with these potential claims.

Nottingham-based AIM saw an increase in customer complaints just last month, sending its shares tumbling by 20%.

Insisting that it has “adequate liquidity for the foreseeable future” Morses Club and that it will offer a “fair settlement” to eligible customers who have made legitimate complaints about the lender’s services.

The lender said it would explore alternatives to the scheme, but it was unlikely that the alternatives would result in those with compensation claims receiving significantly less than under the proposed scheme.

Two years ago, Morses Club was forced to suspend some of its online accounts linked to the scandal-plagued financial services firm Wirecard. The business was a card issuer and banking partner for the lender’s digital arm called U Account.

In February Former group CEO Paul Smith resigned with immediate effect. He headed the lender since 2015.

Morses club boss Gary Marshall said: “As the UK’s leading provider of home loans, we offer a valuable service to thousands of our customers who cannot access mainstream credit providers and are likely to need even more support given the current economic climate.

“The potential scheme is designed to ensure a fair settlement for all eligible customers, while securing the future of the company and allowing us to continue providing access to credit for underserved and growing demographics.”

The Morse Club will publish its annual results on August 18.

Morses Club shares fall 40% due to customer complaints scheme

Source link Morses Club shares fall 40% due to customer complaints scheme

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