QuickQuid: payday lender to close leaving thousands of customer compensation claims in doubt | The Independent
The UK’s biggest payday lender, QuickQuid, has collapsed into administration leaving thousands of customers uncertain about their compensation claims.
CashEuroNet, which trades as Quickquid, called in the administrators on Friday after being hit with a huge surge of compensation claims following a crackdown on predatory lending.
The collapse means that thousands of borrowers who have said they were missold unaffordable loans will get only a proportion of the payouts they would have been due.
“For former customers, who feel they have been taken advantage of and are in financial hardship, the future is still uncertain,” said John Cullen, business recovery partner at the accountancy firm Menzies LLP. “The value of any compensation payouts will now depend on the process of closing the company.”
The exact amount will depend on how much money administrators are able to recover to distribute to the company’s creditors.
QuickQuid customers who believe they may be owed compensation can contact the Financial Ombudsman Service (FOS) to make a complaint.
However, the Ombudsman said: “We will be working with the administrators of the company to understand what that means for consumers, but it is unlikely that we will be able to progress any existing complaints about CashEuroNet any further, or look at any new complaints about it.
“Once we have clarity on this from the administrators of the firm, we will be writing to people who currently have cases against CashEuroNet with us to advise them on what they should do.”
CashEuroNet is the UK’s most complained-about payday lender with 10,409 disputes lodged with the FOS last year.
Almost two-thirds of those were upheld, leaving the firm with a hefty bill to redress customers. The company received a further 3,000 complaints in the first half of this year.
Sean Moran, partner and insolvency specialist at the law firm Shakespeare Martineau, said payday lenders have been under huge pressure from stricter rules brought in by the Financial Conduct Authority that capped the total amount of charges and interest payable on loans.
“A lot of these companies ruthlessly target young men and women,” Mr Moran said. “The significant rise in personal insolvency rates for the under-25s is of grave concern – they now make up 6.5 per cent of all personal insolvencies in the UK.
“Further regulation is needed to address the problems caused by deferrals for example – this quickly leads to problems for vulnerable borrowers as they end up paying more in interest and fees. Responsible lending is much needed in these difficult times for the UK economy.”
David Fisher, chief executive of Cash Euro Net’s parent company Enova International, blamed the FOS for QuickQuid’s collapse.
“Over the past year and a half, we have experienced a challenging and uncertain regulatory environment in the UK, despite the fact that the FCA reviewed and approved our business practices and affordability criteria in 2015,” he said.
“The FOS has continued to move the goalposts with its complaints handling decisions, in effect setting ever-changing de facto policies that in many instances was inconsistent with FCA guidelines.”
People who have outstanding loans with QuickQuid are advised to continue making repayments as normal.
“If you miss any repayments you could be hit by fees and additional charges, and it could also harm your credit rating,” said Caroline Siarkiewicz, acting chief executive at the Money and Pensions Service.
“Eleven and a half million adults have less than £100 in savings and investments so lots of people face cash-flow problems which can make quick, short-term credit feel like the only option.
“If you know you need a specific amount of money for a short while there may be more affordable alternatives out there, so it’s a good idea to shop around before you borrow.”
The Money Advice Service website has a guide on alternatives to payday loans, and you can also contact a free helpline on 0800 138 7777