PiggyBank among last payday loan providers collapses

PiggyBank stopped providing loans in July and has now collapsed completely, with 45,000 still paying off outstanding loans.

In addition, MMP Financial Limited, which owns the My Money Partner and Swift Sterling brands, also came under administration.

It is the latest in a series of meltdowns following the legislative crackdown on affordability and compliance controls by the Financial Conduct Authority (FCA).

The uncertainty of the piggy bank

PiggyBank was banned from offering new loans to clients in July as the FCA investigated whether it performed appropriate credit assessments on new applicants.

They have offered short-term loans of up to £ 1,000 to clients with a maximum APR of 1,698% for loans of up to five months and are said to have 45,000 clients.

While the FCA completed its review of PiggyBank’s affordability controls in September, its owner DJS has since collapsed and appointed directors.

It is likely that many clients have outstanding complaints and compensation claims with PiggyBank, and it is not clear whether there will be any money available to compensate clients after the official liquidation of the company. ‘business.

Customers with outstanding loans should continue to repay as usual.

collapse of the MMP

The owner of two other payday loan brands, MMP Financial Limited, also collapsed, pulling My Money Partner and Swift Sterling from the short-term loan market.

While the details of this collapse are currently unclear, the admin note makes it clear that the process can be lengthy and that admins will work with FCA to support affected clients.

Customers must continue to pay their payday loans and, if there is a complaint, the company can always be approached to have the claim assessed.

However, clients of My Money Partner and Swift Sterling are cautioned that they will be treated as unsecured creditors, and the same is true for clients who seek compensation from PiggyBank.

This means that they are unlikely to receive as much compensation as they would otherwise if the company had continued to trade – and they may not see any at all.

A wave of wages collapses

These administration announcements are the latest in a long line of collapses stretching from Wonga in August 2018 to the present day.

Since then we’ve seen The Money Shop crumble due to high levels of historic complaints, QuickQuid has followed for the same reasons, and more recently pawnshop H&T announced it would stop providing loans to customers. while the FCA investigates.

This series of collapses must be seen in the context of FCA’s heightened vigilance regarding the affordability of these types of loans. The complaints were cited by The Money Shop and QuickQuid as contributing to their collapse, with QuickQuid having 10,000 complaints outstanding at the time of its collapse.

On the one hand, the disappearance of these expensive lenders from the UK market is a good thing. High-cost payday loans and short-term loans are an expensive way to borrow, with customers paying high interest rates and fees.

FCA’s efforts to cap fees in recent years have obviously had an impact, particularly the rule that lenders cannot charge more than 100% of the loan’s value in fees and charges. This makes each loan less profitable for lenders and may have contributed to the number of meltdowns we are seeing.

Removing high-cost forms of credit from the market protects clients who are vulnerable to loans they cannot afford and who have difficulty repaying them. That said, there are valid concerns about where these vulnerable clients will now have access to credit.

Unregulated lenders such as loan sharks or informal loan agreements can put clients in even more trouble. For more information on alternatives to payday loans, read this guide.

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