Britain’s top payday lender has said it will pull out of the country as a slew of complaints and regulatory uncertainty rocked the business.
QuickQuid’s US owner Enova had been working for months to reach a deal with authorities after customers filed more than 3,000 complaints about the company in just the first six months of the year.
“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,” chief executive David Fisher said as he announced the company would withdraw from the UK this quarter.
Enova will take a one-off after tax charge of around $74 million (£58 million), which includes a cash charge of $43 million (£33 million) to support the end of its lending in the UK.
Enova did not clarify what will happen to its UK customers.
The company claims to have lent to more than 1.4 million people in the country.
I'm a QuickQuid customer - what should I do?
Customers of payday loan firm QuickQuid should carry on with their repayments despite uncertainty around the firm's future, the head of the Money and Pensions Service has said.
Caroline Siarkiewicz, acting chief executive at the Government's Money and Pensions Service, said: "Many QuickQuid customers will be feeling uncertain about what this means for them.
"While you may be tempted to stop your repayments, it is crucial to keep to your regular schedule, because if you have entered into a loan agreement you must fulfil it.
"If you miss any repayments you could be hit by fees and additional charges, and it could also harm your credit rating."
Tola Fisher, a personal finance expert at Money.co.uk, said that borrowers will likely still have to pay back their loans.
Meanwhile, those with complaints against the process could face delays.
“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,” she said.
QuickQuid is the best-known brand of CashEuroNet UK.
The payday sector has faced a squeeze since coming under tougher rules under City regulator the Financial Conduct Authority (FCA), to prevent people being trapped in debt spirals, following an outcry from charities and consumer campaigners.
A cap was placed on the amounts payday lenders were allowed to charge and they have had to meet the FCA’s stricter standards in order to continue operating.
The Financial Ombudsman Service (FOS) received more than 3,000 complaints relating to CashEuroNet UK between January and June 2019.
Earlier on Thursday, Sky News reported that auditor Grant Thornton had 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 its doors a year ago.
The claims management companies themselves are worried that the failure of QuickQuid could be damaging for consumers who have already had to deal with one collapse in the sector.
It is unclear how many jobs at the payday lender might be put at risk if it goes under.