The UK’s largest payday lender is set to shut down after a host of complaints and regulatory uncertainties rocked the business.
QuickQuid’s US owner Enova had been working for months to reach an agreement with authorities after customers filed more than 3,000 complaints against the company in the first six months of the year.
“We worked with our UK regulator to agree a lasting solution to the high number of complaints to the UK Financial Ombudsman, which would allow us to continue to provide access to credit to hard-working Britons,” said the managing director David Fisher by announcing that the company would be stepping down. from the UK this quarter.
Enova will levy a one-time after-tax charge of approximately US $ 74 million (£ 58 million), which includes a cash charge of US $ 43 million (£ 33 million) to support the termination of its loans in the UK.
QuickQuid is the best known brand of CashEuroNet UK.
The breakdown service industry has faced a squeeze since it was subjected to stricter rules under the city’s regulator, the Financial Conduct Authority (FCA), to prevent people from being trapped in debt spirals, following an outcry from charities and consumer activists.
A cap was placed on the amounts that payday lenders were allowed to charge and they had to meet more stringent FCA standards in order to continue operating.
The Financial Ombudsman Service (FOS) received over 3,000 complaints relating to CashEuroNet UK between January and June 2019.
Earlier Thursday, Sky News reported that auditor Grant Thornton had been lined up to take the company under administration.
Industry insiders say the industry must constantly change to meet expectations.
Meanwhile, lenders are beset by customer complaints, often encouraged by claims handling companies.
These claims were one of the main reasons rival Wonga was forced to shut down a year ago.
Claims handling companies themselves fear that QuickQuid’s failure could be damaging to consumers who have already faced an industry collapse.
It’s unclear how many jobs at the payday lender could be at risk if it goes.
Enova did not say what would happen to its UK customers.
The company claims to have loaned to more than 1.4 million people in the country.
Tola Fisher, personal finance expert at Money.co.uk, said borrowers will likely still have to repay their loans.
Meanwhile, those who complain about the process could experience delays.
“If you are currently seeking compensation from QuickQuid for a mis-sold loan and it goes bankrupt, you will have to wait until the directors have liquidated the company.
“Unfortunately, you might find yourself at the end of a long line to collect your money,” she said.