UP to 387,000 former customers of a collapsed payday lender could demand redress if they believe they were sold an unaffordable loan.

Administrators for DJS (UK) Limited – which traded as PiggyBank – say they have been unable to work out how many unsecured creditors it has because they do not know many claims there might be.

The company was one of the UK’s 10 biggest payday lenders, offering short-term loans of up to £1,500 online, at an interest rate of 0.8 per cent per day.

It had 57 staff based at Parkway House in Avenue Road, Bournemouth, as of mid-2018, and had been voted one of the UK's best companies to work for.

But it was suspended from lending after the Financial Conduct Authority raised concerns that its affordability checks were not good enough. It went into administration late last year.

PiggyBank owner DJS (UK) Limited goes into administration

A progress report by joint administrator Shane Biddlecombe, of HJS Recovery, said the company had a loan book of £24.7million at the time of its administration, of which £1.59m had been collected.

Since the coronavirus lockdown, recovery of loans had reduced from around £300,000 every four weeks to an average of £226,000 every four weeks.

“We have continued to receive claims for redress and since the date of appointment 278 borrowers with active loans have had a redress claim agreed which has been offset against their remaining balance due to the company,” Mr Biddlecombe wrote.

The claims amounted to £120,208.

He added: “There are 387,000 former customers that may be entitled to make a redress claim against the company.”

The administrators were required to invite and assess claims from former customers, which would stand alongside claims from other unsecured creditors, he said.

“We have not included a figure for the total of unsecured creditors, as it is not currently possible for the administrators to accurately assess the level of redress claims from customers as this stage,” he added.

There is expected to be £600,000 left to pay unsecured creditors.

Administrators expect to realise £16.5m from the company’s assets.

It had 46 debentures – loans secured against its assets – held against it by wealthy investors. It is expected there will be £13.9m for the investors, who are owed an estimated £21.8m.