The bloodbath in the loans market has meant that many of the small and medium sized loans companies that once sold loans have gone bust or dissolved, particularly those that sold to people with impaired credit.

The result is that many clients who make a claim because they believe they were mis-sold payment protection insurance cannot reclaim against the business that sold the loan to them, because it no longer exists. Instead they are appealing for refunds from the Financial Services Compensation Scheme.

Take Picture – they were a specialist lender whose PPI premiums for a five year loan often amounted to 50% of the initial loan value. The problem is that Picture went into liquidation last year so any customer that makes a claim is re-directed to the Financial Services Compensation Scheme. And under that process, compensation can easily take 12 months to come through.

There are suspicions that some of the lenders have dissolved themselves to avoid the mis-selling liabilities that stood on their books. In our view, if that can be proved, then lawyers should find ways to hold the Directors personally responsible for the company’s mis-deeds.