Britain’s biggest payday lender to close by end of 2019
Britain’s biggest remaining payday lender said it would close by the end of December, blaming its demise on what it said was capricious regulation, just a year after rival Wonga axed also succumbed to a deluge of costly consumer complaints.
The closure of CashEuroNet UK, which offers loans to UK customers at an annual percentage rate of over 1,000% under the QuickQuid and Pounds to Pocket brands, reflects a growing global backlash against high cost lenders.
Google this month banned apps offering expensive loans through Android phone apps in the United States, while the US state of California banned triple-digit interest rates on small personal loans.
The Financial Ombudsman Service received nearly 9,000 complaints about CashEuroNet in the year to June, according to official figures.
David Fisher, chief executive of US-listed parent company Enova, said the ombudsman had sided with customers so often that he was “moving the goalposts. . . establishing an ever-changing de facto policy that, in many cases, was inconsistent with FCA guidelines.”
The Financial Conduct Authority had reviewed CashEuroNet’s “business practices and accessibility criteria” as recently as 2015, and allowed the business to continue operating, he said.
But Enova had been unable to “agree on a lasting solution to high complaints” and could not afford to continue investing in the UK business, the company said. He expects to incur a charge of $74 million following his departure from the UK.
The Mediation Service could not be reached for comment Thursday evening. Mr Fisher spoke to US investment analysts in a call that took place outside UK office hours.
After announcing his withdrawal from Britain, the Enova boss turned to America, where payday lenders have also fallen out of favor with some regulators.
The move by Sacramento lawmakers to cap interest rates on many personal loans at around 39% would “unfairly and unnecessarily restrict access to credit for Californians,” he said.
“We strongly disagree with Google’s decision” to ban expensive loan apps on Android phones, he added.
The tech company blocked short-term lenders from advertising on its platforms as early as 2016. But Mr Fisher didn’t expect the new app ban to have much effect; customers, he said, could instead use their phones to take out a loan through the company’s website.