Peachy and Uploan payday loan brands in administration
Directors have been appointed, but clients with outstanding loans are expected to continue paying as usual, but no new loans will be issued by either company.
Administrators have already warned customers with outstanding abuse-selling claims will likely receive significantly less compensation than the claim amounts accepted.
These are the latest in a series of collapses that have pulled big names like Wonga and QuickQuid off the market.
Peachy was one of the biggest short-term lenders in the UK market after many major rivals have disappeared in recent years.
They claimed to have made loans to two million customers since 2010, although reports suggest they had 29,000 customers at the time of their collapse.
The advice on Peachy’s website confirms that clients with outstanding unaffordability claims will be considered unsecured creditors and therefore unlikely to receive the true value of their compensation. This is the case even for clients who already have a final response letter.
This mirrors what we saw when Wonga collapsed in 2018 and customers only learned they would receive 4.3% of what they were owed in January 2020.
The other brand of Cash on Go, Uploan, is less well known as it only started marketing in 2019, offering loans between £ 500 and £ 2,000. While there may be outstanding complaints for this brand, the scale is likely much smaller.
Sector in difficulty
The demise of the Cash on Go brands follows a series of high-profile collapses, starting with Cash Genie and Wonga, to The Money Shop, QuickQuid and PiggyBank in the past year alone.
Most of the problems faced by payday lenders stem from a series of reforms implemented by the FCA, including caps on interest rates, fees and charges first mentioned in 2014.
This was followed by tighter affordability checks on potential clients, and this is where many lenders have struggled with compensation claims from clients who think they have mis-sold their loans.
Such claims undoubtedly contributed to Peachy’s collapse, although it is unlikely that they had the 10,000 outstanding complaints that QuickQuid had at the time of the collapse.
Alternatives to payday loans
Payday loans and other expensive short-term loans are often the last resort for customers who are struggling to get credit elsewhere.
Hence, they come with high interest rates which can let a customer overpay for the privilege of accessing credit. For some clients, this traps them in a continuous circle of debt.
However, just because the market contracts, it does not necessarily follow that the demand for high-cost short-term credit decreases, and there are concerns that clients may be pushed to unregulated lenders such as loan sharks. .
We have a guide on alternatives to short term loans which also explains how customers can check if a provider is licensed and what the rules are for short term credit.
There is also a guide dedicated to credit unions. To learn more about this alternative to payday loans, click here.
Choose offers a variety of resources to help clients with debt issues. Learn more about the rules around debt and mental illness here or read our five-step guide to budgeting and debt relief here.