Biggest payday lender QuickQuid on brink of collapse

Britain’s biggest-remaining payday lender is on the verge of collapse, accelerating the demise of consumer finance providers in the wake of a regulatory crackdown.

Sky News has learnt that CashEuroNet UK, which trades under the QuickQuid brand, could be placed into administration within a matter of days.

If confirmed, the move would come little more than a year after Wonga – at the time the UK’s biggest short-term lender – was plunged into insolvency amid a deluge of customer compensation claims.

Grant Thornton, which is handling the administration of Wonga, is understood to have been lined up to undertake the same role at CashEuroNet UK if the parent company’s board decides to pursue an insolvency process.

An accountancy profession insider said that Grant Thornton had been lined up following a competitive tender process.

CashEuroNet UK has for some time been one of the UK’s most complained-about consumer finance providers, drawing more than 3000 complaints to the Financial Ombudsman Service (FOS) during the first half of the year.

In 2015, the company, which also owned the Pounds to Pocket brand, agreed to provide £1.7m in customer redress after it failed to adhere to affordability tests.

If it does fall into administration, a number of jobs will be put at risk, although the size of the affected workforce, its current customer base and its outstanding loan book were unclear on Thursday.

CashEuroNet UK is owned by New York Stock Exchange-listed Enova International, which is scheduled to announce its third-quarter financial results after the market close on Thursday.

Enova says it has provided more than 5 million customers around the world with more than $20bn in loans and financing, while QuickQuid’s website refers to “over 1.4 million customers and counting”.

Its other UK brand, On Stride Financial, provides unsecured personal loans of up to £5,000 as an alternative to payday loans.

The payday lending sector has come under acute pressure in the UK following the introduction of stricter affordability checks and a cap on the cost of short-term credit for consumers.

Wonga’s collapse came just weeks after it had secured an emergency cash injection from shareholders in a desperate bid to stay afloat.

Another major player called Instant Cash Loans (ICL), which owns The Money Shop, Payday Express and Payday UK, recently sought approval for a compromise arrangement under which up to 2 million customers could receive payments if they have a valid complaint about a loan.

Mis-selling complaints must be submitted by ICL customers by next spring.

ICL is owned by the US-based hedge fund HPS Investment Partners, which took the decision during the summer to close a business which has also ranked among the biggest payday lenders in the UK.

It was unclear whether CashEuroNet UK had held talks with the Financial Conduct Authority about a similar compromise scheme.

Enova has previously suggested that the FOS was adopting an overzealous approach to the treatment of complaints in customers’ favour.

The US-based company, which is profitable and also runs operations in Brazil, has a market capitalisation of about $700m (£538m).

Scores of other providers have gone to the wall during the five years since the FCA assumed responsibility for regulating the industry.

In the wake of Wonga’s demise, Nick Drew, the managing director of CashEuroNet UK, insisted that its business was “profitable and growing, and we remain excited about the opportunities, especially in light of the diminished competition in the market”.

The disappearance of so many players in the sector has highlighted the difficulties that many consumers face in accessing credit to meeting short-term financial needs.

CashEuroNet declined to comment, while Enova could not be reached for comment.

The FCA and Grant Thornton also declined to comment.

(c) Sky News 2019: Biggest payday lender QuickQuid on brink of collapse