Payday lender QuickQuid is to close after thousands of complaints - here’s what it means for customers
The UK's biggest payday lender is to close after thousands of complaints and regulatory uncertainty rocked the business.
US owner of the brand, Enova, had been working for months to reach a deal with authorities after more than 3,000 complaints were filed by customers about the company in just six months.
Most complained about lender
QuickQuid is the best-known brand of CashEuroNet UK and claims to have lent to more than 1.4 million people in the country.
Enova will take a one-off after tax charge of around $74 million (£58 million) to support the end of its lending in the UK.
On announcing the company would withdraw from the UK this quarter, chief executive David Fisher said: “We worked with our UK regulator to agree upon a sustainable solution to the elevated complaints to the UK Financial Ombudsman, which would enable us to continue providing access to credit for hardworking Britons.”
CashEuroNet UK has been one of the UK's most complained about finance providers for some time, receiving more than 3,000 complaints to the Financial Ombudsman Service during the first half of this year.
It was the most complained about payday lender in 2018, with over 10,000 complaints - 63 per cent of which were upheld in favour of the consumer.
In 2015, the company was forced to provide £1.7 million in compensation after lending money to people who could not afford to repay it.
The payday sector has faced a squeeze since tougher rules were brought in under City regulator the Financial Conduct Authority (FCA), to prevent people being trapped in debt spirals, following an outcry from charities and consumer campaigners.
The new rules placed a cap on the amounts payday lenders were allowed to charge, forcing them to meet the FCA’s stricter standards in order to continue operating.
The closure of the company comes just over a year after Wonga (the UK's former biggest short-term lender) was plunged into insolvency, following a flood of customer compensation claims.
It is understood that auditor Grant Thornton, which is handling the administration of Wonga, has been lined up to take the company into administration.
Industry insiders say that the sector is constantly having to change to meet expectations.
Meanwhile, lenders are being barraged by complaints from customers, often encouraged by claims management companies.
These claims were a major reason that rival Wonga was forced to close a year ago and claims management companies fear the failure of QuickQuid could be damaging for consumers who have already had to deal with one collapse in the sector.
US owner Enova did not clarify what will happen to its UK customers (Photo: Shutterstock)
What does it mean for customers?
It is yet unclear how many jobs will be at risk as a result of the closure, and Enova did not clarify what will happen to its UK customers.
Tola Fisher, a personal finance expert at Money.co.uk, told the Metro that borrowers will likely still have to pay back their loans.
Those with complaints against the process could also face delays.
Fisher said: “If you’re currently claiming compensation from QuickQuid for a mis-sold loan and it goes bust, you will need to wait until the administrators have wound up the company.
“Unfortunately you might find yourself at the back of a long queue to get hold of your money.”