Increased scrutiny and regulatory pressure is forcing QuickQuid the UK’s largest payday lender to cease operations. QuickQuid’s withdrawal from the UK’s consumer finance market follows that of Wonga, another household consumer finance name, which went into administration on 30 August 2018.
QuickQuid and other payday lenders are regulated by the Financial Conduct Authority (FCA). Customers of FCA regulated financial services companies are able to make a complaint with the Financial Ombudsman Service (FOS).
QuickQuid has been the subject of over 10,000 complaints and according to the FOS it has upheld as many as 59% of these complaints.
Payday lenders offer credit to sub-prime borrowers also known as non-prime borrowers. These are borrowers that do not have a credit rating that will allow them to access credit from high street banks.
According to data made available by QuickQuid’s parent company Enova International Inc. (Enova), in the UK, the average non prime borrower in the UK has an annual income of £25k per annum, is 33 years old and 14% are homeowners.
Enova currently has a £7 billion consumer loan portfolio in the UK. The size of the non prime UK consumer credit market, also known as the non standard credit market in 2019 is estimated to be comprised of 10-12 million people, is £72 billion in size and is growing at an average rate of 5% per annum.
On 2 January 2015, new rules introduced by the FCA came into effect capping the amounts payday lenders could charge their customers. These rules meant that payday lenders could not charge more than 0.8% daily interest, not more than the amount borrowed in interest over the life of the loan and default fees were capped at £15.
We must put this into perspective. Payday lenders’ borrowing charges are much higher than what high street banks charge but so are their funding costs. QuickQuid charge a representative annual percentage rate (APR) of 1300.50% and a fixed interest rate of 292%.
If you have any queries regarding the law around consumer finance and credit then contact us at Audley Chaucer Solicitors.
Written by Stephen Rahn