UPDATE After a worrying day for customers, late in the afternoon of 25 October it was announced that CashEuroNet had gone into administration.
See QuickQuid goes into administration – what will happen for the latest news and how this will affect you. That article will be kept update from now on. This one won’t be.
On 24 October, Enova, the American parent of CashEuroNet, announced it is exiting the UK market.
CashEuroNet is Britain’s biggest payday lender, owning the QuickQuid, Pounds To Pocket and On Stride brands
It now seems very likely that CashEuroNet will cease trading and go into administration.
The announcement was made as part of its profitable US parent Enova’s third quarter results. These said:
Enova also announced today it intends to exit the U.K. market in Q4. Enova anticipates it will record a one-time after-tax charge of approximately $74 million, including one-time cash charges of approximately $43 million to support cessation of U.K. lending activities.
“Over the past several months, we worked with our U.K. regulator to agree upon a sustainable solution to the elevated complaints to the U.K. Financial Ombudsman, which would enable us to continue providing access to credit for hardworking Britons,” said Fisher.
During the Enova earnings conference call, Enova blamed an uncertain regulatory environment in the UK, in particular the Financial Ombudsman:
“FOS… has continued to move the goalposts…. setting ever-changing de facto policy that in many instances was inconsistent with FCA guidelines.”
I have watched FOS decisions on affordability for several years and that seems to me to be a wild assertion.
How many people will this affect?
I am assuming that QuickQuid will go into administration. A report on Sky said that Grant Thornton would be the administrators.
This will directly affect the thousands of customers who have a complaint with QuickQuid or with the Financial Ombudsman (FOS). Some of the complaints with FOS have been waiting for a decision for more than two years.
There will probably be well over a hundred thousand customers who have a good reason to make an affordability complaint about their QuickQuid loans but haven’t known that they could do this.
Now all these customers will have to make a Claim to the QuickQuid Administrators, who will assess the claims. The remaining money will be divided between the people who have a valid Claim.
The Wonga Administrators have received more than 400,000 valid claims for unaffordable loans at an average value of £1,200 a claim. The Wonga Administrators say they expect people will receive “significantly less” than the calculated refund.
There are no compensation arrangements to help customers whose payday lender closes. If a PPI firm went under, customer owed a refund could claim it from the Financial Services Compensation Scheme (FSCS) but the FSCS doesn’t apply to lenders.
Who are now Britain’s biggest payday lenders?
In 2015, the UK payday loans market was dominated by three firms:
- the Money Shop / Payday UK / Payday Express group;
- Wonga; and
- the QuickQuid / Pounds To Pocket group
Since August last year, all three have now all gone under because of the cost of paying payday loan refunds.
Loan numbers aren’t published for payday lenders – probably only the regulator knows the complete picture.
But my guess is that Lending Stream and Sunny are now likely to be the largest lenders.
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