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The UK’s largest Payday loans lender QuickQuid is to close which will leave several complaints regarding its lending unresolved. The payday loans company has indicated that it will be folding from the UK market because of regulatory uncertainty.
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Payday loans lenders mis-sold customers unaffordable loans
Customers raised complaints that the lender offered them loans that they were unable to repay. Payday loans lenders have faced growing compensation claims from customers who claim they mis-sold them unaffordable loans.
QuickQuid’s US-based owner Enova International has been working with regulators for months trying to broker a deal regarding the complaints. The customers filed complaints about CashEuroNetUK in the first half of the year.
Enova Boss David Fisher indicated that they have been working with the UK regulator to resolve the complaints. Further, Fisher said that reaching an agreement on the complaints filed to the Financial Ombudsman will enable the company to continue giving payday loans. He, however, indicated that they were disappointed not to reach an agreement. Consequently, the move to leave the UK market is ideal for Enova and its stockholders.
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In the last few years, QuickQuid has been the largest payday loans lender in the country. It is among the companies offering payday loans that attract high interest to close following the tightening of regulations.
Recently another big name in the industry Wonga went bust after an increase in compensation claims from customers. The lender will most likely enter into administration and already Grant Thornton is lining up to take it.
Tightening regulation on payday loans
New regulations instituted five years ago capped interest rates and fees that payday loans lenders could charge. As a result, this introduced improved affordability checks. Following the new regulations, there has been a proliferation of customer complaints claiming they received unaffordable loans.
Fischer has however blamed the FCA for changing tactics regarding the complaints process. He said that they have faced uncertain and challenging regulatory conditions in the past year in the UK. This is despite the FCA reviewing and approving QuickQuid’s affordability criteria and business practices in 2015. Fischer affirmed that the way the FOS has been handling the complaints does not conform to the guidelines set by the FCA.
CashEuroNetUK had over 3,000 cases in the first half of the year
QuickQuid faces several outstanding complainants from customers. The loan complaints mostly came through claims management firms led to the demise of payday lenders The Money shop and Wonga. The UK FOS indicates that over 3,165 complaints were touching on CashEuroNetUK in the first six months of the year.
CashEuroNetUK accounts for a quarter of the payday loans in the UK market. Its parent company Enova claims to have offered over $20 billion worth of loans to 5 million customers across the globe. QuickQuid on its website indicates that it has financed more than 1.4 million customers.
Rebecca White is chief editor at CreditRaters.com. Rebecca has an extensive amount of knowledge on financial subjects including short-term loans & debt consolidation in the UK and USA. Rebecca has wrote for many publishers such as Debt Secret, My Money, VL and more.