US-owned lenders have emerged as some of the biggest players in the UK payday loans market after the collapse of former industry mainstay Wonga.com.
QuickQuid, WageDayAdvance and Sunny — owned by US-listed firms Enova International, Curo Group Holdings Corp and Elevate Credit Inc respectively — have made strides, despite a clampdown on high-cost credit by Britain’s financial regulator and a recent surge in customer complaints.
Wonga was brought to its knees in August by a spike in complaints over excessive charges on historic loans that in some cases came with interest rates topping 5,000 percent.
The British Financial Conduct Authority’s (FCA) cap on payday loans charges came into force in 2015 and kept lenders from charging customers more in fees and interest than the amount borrowed.
Some competitors shut up shop as a result and Wonga fell into administration three years later. It cleared the decks for US-owned rivals, whose third-quarter results offer a snapshot of their success.
Wonga collapsed on Aug. 30, part-way through the three-month reporting period to the end of September.
Chicago-based Enova, which also operates Pounds to Pocket and On Stride, saw UK revenue jump 20 percent to US$36.6 million.
Texas-headquartered Elevate Credit operates in the UK under the Sunny loans brand and saw its own UK revenue jump 23 percent to US$32 million, as new customer loans for Sunny rose 45 percent.
Curo, which is behind WageDayAdvance, saw UK revenue jump 27.1 percent to US$13.5 million, while underlying earnings nearly halved from US$8.1 million to US$4.2 million. It was helped by a “high percentage of new customers.”
However, Curo has been hit by a surge in complaints and has been weighing whether to exit the UK market. It said that costs rocketed 77.6 percent to US$7.7 million over the third quarter, when it paid US$4 million to cover the cost of resolving those complaints and compensating customers.
“We do not believe that, given the scale of our UK operations, we can sustain claims at this level and may not be able to continue viable UK business operations,” Curo’s earnings report said, adding that it had been in talks with the FCA and the Financial Ombudsman Service over its options.
Enova and Elevate have said a spike in complaints also posed a risk to their businesses.
However, when contacted by the Guardian, Elevate insisted its UK brands “are different from Wonga,” adding that Sunny “has never charged fees, and imposed our own total cost cap even prior to the FCA rule introduced in 2015.”
Elevate said many of the complaints against it were “without merit” and “reflect the use of abusive and deceptive tactics” by claims management companies (CMC), which pursue complaints on behalf of customers.
CMCs are to come under the regulation of the FCA in April and face a tighter regulatory regime.
Sara Williams, a debt campaigner and author of the Debt Camel blog, said that some CMCs failed basic checks and lodged complaints for customers who had never taken out loans from the respective payday lender.
She said she hoped FCA regulation has a similar impact on CMC standards as it did on the payday lending industry, which resulted in “many of the worst lenders exiting the business.”
“The CMCs are not the root cause of the crisis for payday lenders,” Williams said, adding that the real issue had been irresponsible lending decisions and inadequate affordability checks.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
RSS