The UK’s largest payday lender, QuickQuid, is to close after its US-based owner, Enova, announced it plans to withdraw from the British market.
Enova cited “regulatory uncertainty” as a key reason for its decision.
QuickQuid is one of the brands of CashEuroNet UK, which also runs On Stride – a provider of longer-term, larger loans and previously known as Pounds to Pocket. All are owned by Enova.
QuickQuid has been the largest payday lender in the UK for several years and was bigger than Wonga prior to its collapse in August last year.
Currently, each case that the Financial Ombudsman Service (FOS) processes, including invalid claims, costs the lender approximately £500.
Complaints made to the FOS over high-cost, short-term lenders soared by 130 percent in 2018-19, according to its annual report. FOS received 3,165 cases against CashEuroNet in the first half of the year, according to its individual companies complaints data.
"Over the past several months, 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," Enova’s chief executive David Fisher said.
“While we are disappointed that we could not ultimately find a path forward, the decision to exit the UK market is the right one for Enova and our shareholders.”
Jason Wassell, chief executive of the Consumer Finance Association (CFA), the body which represents short-term lenders, said: “Firms have seen continued to see the increase in complaints about historic lending, often driven by claims management companies. In a system where the lender pays a fee win or lose, the volume of complaints can have a massive impact on lenders of all sizes.
“The loss of a number of companies does raise important questions about access to credit. It has highlighted the difficulties that many consumers will face in accessing credit to meet short-term financial needs.
“This supply of credit is not being replaced. There may be talk about the need for alternatives, but we haven’t seen replacements emerge. Credit unions are unwilling to unable to scale to serve our market. Salary finance is often an unregulated trick of moving all the risk to the customer, avoiding the protections and checks we carry out.
"One of the inconvenient truths is that lending when there is a higher risk of default will require a higher price."
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