Payday loan company Money Shop faces uncertain future just days after Wonga bankruptcy
It’s the latest in a string of payday business closures after a crackdown on fraudulent lending rates
Image: Chronicle of Newcastle)
Another controversial payday lender faces uncertainty – just days after Wonga went bankrupt.
Money Shop, Britain’s second-largest payday company, has stopped offering new short-term loans through its website and stores.
The move comes as Wonga’s angry clients risk losing thousands of pounds in unpaid compensation after the company is taken into administration.
It is the latest in a string of payday business closures after a crackdown on fraudulent lending rates.
Money Shop has faced a growing number of claims for alleged bogus sales of old loans.
Three years ago, its US parent company Dollar Financial UK was forced to repay £ 15.4million after regulators found the company responsible for “serious misconduct”.
A total of 147,000 customers received £ 100 each.
Dollar Financial UK has also announced the closure of over 200 Money Shop branches. A post on its website read: “The Money Shop no longer offers a short-term loan facility.”
Sara Williams, of financial advice website Debt Camel, said, “The Money Shop and Wonga were once icons of the payday lending industry.
But in the face of an interest rate cap in 2015 and growing compensation claims related to irresponsible lending, it’s no surprise that the two companies have stopped offering loans.
Accountant Grant Thornton, who is terminating Wonga, said: “Customers should continue to make payments in the usual way.”