FCA raises concerns over Morses Club’s scheme of arrangement

It’s concerned about, amongst other things, the uncertainty of the funding that would be needed for the scheme, the methodology for identifying customers owed compensation and the fact that consumers could be worse off because of the scheme.  

It has also raised worries about whether the pros, cons and risks of the scheme would be brought to the customers’ attention effectively when asked to vote on the scheme.  

On 13 December last year, Morses Club outlined its plans to enter a scheme of arrangement with its creditors, proposing a £20m customer redress plan – with the plan being that those creditors in need of cash compensation would receive between 40% and 55% of what they’re owed. This money would be paid out before the end of September 2024.   

If the scheme, however, does not receive creditor or court approval, then Morses Club will be insolvent, and it would close as a business.  

The FCA has said it’s outlined its concerns over its scheme of arrangement to the doorstep lender, and the business stated it would now investigate these concerns and consider whether improvements can be made ahead of the sanction hearing – which is currently due to take place on 26 May.