Payday lender QuickQuid is the latest loan shark to shut down after a wave of compensation claims from victims of predatory practices.
US-based Enova, which owns QuickQuid, announced on Thursday (October 24) that it would be pulling out of the UK market, citing “regulatory uncertainty”. The move will mean that one of the last remaining payday lenders in the UK could go into administration in a matter of days.
QuickQuid’s imminent demise comes less than a year after rival Wonga went bust after likewise being inundated by compensation claims from customers who were mis-sold unaffordable loans.
Like Wonga and another payday lender the Money Shop, which went bust in June, QuickQuid sold loans with sky-high interest rates. If someone took out a loan with QuickQuid of £250 for three and a half months, for example, they would be slammed by interest rates equivalent to an APR of 1,300 per cent.
QuickQuid’s likely closure will throw into doubt the levels of compensation that customers – many of whom were thrown into extreme poverty as a result of the lender’s practices – may now be able to claim back.
When Wonga went under in 2018, administrators Grant Thornton reported receiving more than half a million compensation claims, with the majority justified. But in the end, those who tried to claim money back only received a fraction of what they were due.
The crumbling of the UK payday lender industry, with QuickQuid the latest and the biggest loan shark to go under, comes just as a new report into austerity was published showing how government austerity policies since the financial crisis has wrecked economies and living standards.
The report, from the TUC, found that governments in developed OECD nations that cut public spending in the wake of the crash experienced an across the board slowdown in GDP growth. The only countries which experienced growth – Germany and Japan – both rejected austerity and increased public spending.
Living standards were also hit hard by austerity – wage growth halved across OECD nations since the financial crash, with annual real pay growth averaging less than 1 per cent for two-thirds of countries.
UK workers in particular have suffered – in fact, only Lithuania, Estonia, Greece and Latvia experienced a greater reduction in wage growth among the countries analysed since the financial crash.
Commenting on the report, TUC General Secretary Frances O’Grady said, “Austerity was always a political choice. It’s now clear how much harm it caused, holding down economic growth and living standards.
“We can’t afford to make the same mistake again. If there’s another crisis, the government’s response must be to focus on public investment to make our economy stronger.”
Unite assistant general secretary Steve Turner agreed as he took aim at the payday lender industry.
“The predatory practices of loan sharks go hand in hand with government austerity,” he said. “Precisely what stokes demand for pay day lenders is the continued attack on people’s living standards that is a direct result of this Tory government’s policies – and of course the pay day vultures are only too happy to circle ahead, preying on those who are left with no other choice.”
“There will be few tears shed for the likes of QuickQuid, but as always it will be the workers and customers who will suffer most. Just as it was with Wonga, those who have rightful compensation claims will scandalously only get back a fraction of what they’re owed,” Turner added.
“While we always welcome greater regulation to rein in payday lenders’ practices, we can better take on these legal loan sharks by increasing wages and ending austerity. As today’s TUC report has shown, austerity has crippled our economy and driven an historic slowdown in wage growth. Our only hope now is through the Labour party – the only party committed to ending austerity once and for all.”