QuickQuid customers urged to keep up repayments amid closure plans
QuickQuid customers should keep up their repayments despite uncertainty around the payday loan firm’s future, the head of the Government-backed Money and Pensions Service has said.
Enova, the US owner of the UK’s biggest payday lender, said on Thursday night that it is pulling out of the country after failing to reach an agreement with the UK Financial Ombudsman about how to deal with a slew of complaints from QuickQuid customers.
The Money and Pensions Service warned customers of the payday loans firm not to be tempted to stop making repayments.
Doing so could mean their credit ratings could be hit and they could also face extra fees and charges, it said.
Caroline Siarkiewicz, acting chief executive at the Money and Pensions Service, which is sponsored by the Department for Work and Pensions, 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.”
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 hard-working Britons,” said chief executive David Fisher as he announced that the company would withdraw from the UK this quarter.
Enova will take a one-off after tax charge of around 74 million US dollars (£58 million), which includes a cash charge of 43 million US dollars (£33 million) to support the end of its lending in the UK.
QuickQuid is the best-known brand of CashEuroNet UK.
The payday sector has faced a squeeze since facing tougher rules from 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 are 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.
Some 3,165 new cases relating to CashEuroNet UK were received – and 59% of complaints dealt with during the period were upheld in consumers’ favour.
Earlier on Thursday, Sky News reported that auditor Grant Thornton had been lined up to take the company into administration.
Industry insiders say the sector is constantly having to change to meet expectations.
Meanwhile, lenders have been inundated with 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.
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.
Tola Fisher, a personal finance expert at Money.co.uk, said 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,” said Ms Fisher.
“Unfortunately you might find yourself at the back of a long queue to get hold of your money.”