HIGH cost lender TFS Loans went bust after running out of cash due to customer refund requests.
The guarantor loan firm has appointed administrators after it was unable to satisfy the cost of compensating customers following unaffordable lending claims.
Opus Restructuring, which was was hired as administrator now, said "the main reasons for the failure of the business are rooted in unaffordable lending".
This resulted in complaints to the Financial Ombudsman Service and led to redress payments being awarded.
TFS, that has 12,000 customers, stopped lending in February 2023 "due to deficiencies in its processes and complaint handling procedures".
It ran out of cash in January this season, when it was unable to meet customers' refund requests.
Guarantor loans are when another person – for example a friend or family member – agrees to pay the cash back should you can't make the payments.
The company charged APR of between 29.9% and 39.9%.
Other firms in the sector go bust in recent years including payday lender Wonga and doorstep loan firm Provident.
As along with the influx of customers, TFS also blamed the pandemic on its decline, as a result of drop off in lending during lockdown.
Opus said: "It has been necessary to place TFS into Administration to be able to protect the business and the interests of creditors.
"We wish to stress to customers that this does not alter the terms of any loans they've removed with TFS Loans Limited.
"It is crucial that all customers must still repay their loans in accordance with the relation to 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 still repay their loans.
We have asked what the administration means for customers with claims against the lender, and we will update this site whenever we learn 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 any or all customers and creditors from the company after they have finished an in depth assessment of the business."
In the same situation, claimants haven't received the entire amount these were owed.
For example, Wonga victims received just 4p for each lb1 they were due to get paid.
Consumers ought to be wary of scammers trying to make use of the situation.
TFS said hello won't ever ask for your bank details over the phone.