The UK’s biggest remaining payday loan provider is to close, with thousands of complaints about its lending still unresolved.
QuickQuid’s owner, US-based Enova, says it will leave the UK market “due to regulatory uncertainty”.
Compensation claims have been made from customers who said they were given loans they could not afford to repay.
It is the latest firm offering short-term, high-interest loans to close after regulations were tightened.
QuickQuid has been the biggest payday lender in the UK for the past few years. It was bigger than household name Wonga even before the latter folded in August last year. The Money Shop closed earlier this year.
QuickQuid is one of the brand names of CashEuroNet UK, which also runs On Stride – a provider of longer-term, larger loans and previously known as Pounds to Pocket.
“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,” said Enova boss David Fisher.
“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.”
Do I stop making repayments?
The closure of QuickQuid might lead some to think their loan is invalid – but it is not.
“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,” said Caroline Siarkiewicz, acting chief executive at the Money and Pensions Service.
“If you miss any repayments you could be hit by fees and additional charges, and it could also harm your credit rating.”
Those who are owed money in compensation must wait to see what the next move is for the business.
The Money Advice Service website has a guide on alternatives to payday loans.
New rules brought in five years ago limited the interest rates and fees payday lenders can charge and introduced enhanced affordability checks. Since then there has been a wave of complaints from customers who say they were mis-sold loans they could not afford.
QuickQuid has been facing as many as 10,000 or more outstanding complaints from borrowers.
Such legacy loan complaints, many of which came via claims management companies, were the key reason for the demise of Wonga last year.
As well as historic complaints, QuickQuid was also the subject of compensation claims for more recent loans.
The UK’s Financial Ombudsman Service said that it had received 3,165 cases against CashEuroNet in the first half of the year. It was the second most-complained about company in the banking and credit sector during that six months.
The ombudsman upheld 59% of cases against the company during the same period, but a backlog of cases is thought to have built up.
Anyone with eligible complaints who is entitled to compensation will now see the level of any payouts depend on the process of closing the company.
Debt adviser Sara Williams, who writes the Debt Camel blog, said: “I feel incredibly sorry for those people with complaints that they may have had in with the ombudsman for years.
“The current system does not give adequate protection for these borrowers.”
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