The U.S. owner of CashEuroNet U.K., which operates the QuickQuid and On Stride brands, is considering its options after confirming plans to exit its British operations.
Payday lenders have been increasingly under fire, accused by customers and regulators of having unfair lending practices. Wonga collapsed in 2018 and The Money Shop in June due to similar issues.
QuickQuid’s announcement was triggered by its parent company Enova’s inability to strike an agreement with U.K. regulators.
Enova chief executive officer (CEO) David Fisher blamed the ombudsman for ruling in favor of customers whenever complaints were lodged. He said the regulator was always “moving the goalposts . . . setting ever-changing de facto policy that in many instances was inconsistent with FCA guidelines.”
But Enova could not come “to agree upon a sustainable solution to the elevated complaints.” The company said it anticipates a $74 million fine when it exits the U.K.
There have been almost 9,000 complaints lodged with The Financial Ombudsman Service about CashEuroNet from January to June.
The battle over payday lending — specifically, how tough U.S. federal rule will be in governing the industry — is heating up as an important deadline looms. Letters favorable to the payday lending industry are reportedly flooding in to authorities before the May 15 cutoff for public comment regarding a proposed policy change.
Google banned apps charging interest rates of 36 percent or more, which now puts the tech giant in the middle of the overall fight against payday loans. Before the app ban, Google — owned by Alphabet — started prohibiting payday loan ads from appearing in its search engine.
California and Ohio are among states that have started implementing measures to stop high-interest loans. The Obama administration had initiated policies to curb predatory lenders. However, the Trump administration has been trying to reverse those laws.
Earlier in October, California Gov. Gavin Newsom signed a law mandating a 36 percent interest-rate cap on consumer loans of $2,500 to $10,000.