One of the UK’s best-known payday lenders has collapsed into administration – the latest apparent victim of a crackdown on expensive loans.
Peachy was one of the biggest names in the controversial industry after the disappearance of Wonga and Quid quick, and its collapse will be a blow to customers who claim they were badly sold loans they couldn’t afford. Administrators warned that compensation paid to able-bodied claimants would likely be “considerably smaller” than the claim amounts accepted by individuals.
Peachy claimed to have served 2 million customers since 2010, although it is understood that as of this week he has around 29,000 customers. Its website had quoted a representative interest rate of 855% APR.
Directors of Smith & Williamson were appointed to Peachy’s parent company, Cash On Go, which also operated as a Uploan personal loan provider.
Complaints about this type of high cost loan have jumped in recent years, and the UK’s Financial Ombudsman Service (FOS), the official complaints body, is taking a stronger position.
An increase in costly complaints was one of the key factors leading to Wonga’s demise, and the statement from Peachy’s directors referred to “the company’s financial condition and potential future redress claims.”
He added that the management of the company had tried to obtain new financing in order to be able to continue negotiating, but without success.
Existing clients were told that despite the demise of the business, they still had to repay their loans. “The terms and conditions of all loans remain as agreed upon when the loan was taken out, and payment remains due,” a statement said on the lender’s website.
If customers do not keep their payments, they risk having to pay additional fees or suffer black marks on their credit reports.
Complaints about this type of expensive loan are often related to affordability – for example, a borrower claiming that the checks a business should have done were not done properly, leaving them with interest and fees extra that he cannot afford. Others involve allegations that a company has acted unreasonably or unfairly when a person’s financial situation has changed.