PiggyBank has announced that it is the latest payday lender to fall into administration, leaving 45,000 existing customers in financial uncertainty.
Bournemouth-based PiggyBank is the latest in a wave of payday lenders who have been forced to leave the industry. A surge of compensation claims by ex-customers and much tougher restrictions and regulations from the Financial Conduct Authority has seen PiggyBank join other giants such as Wonga, QuickQuid, The Money Shop and 24 7 Money Box who went into administration last week.
The FCA introduced a price cap in 2015 which capped daily interest to 0.8% per day and default rates at £15 – and firms must undergo a much more rigorous authorisation process and ongoing compliance requirements.
PiggyBank were one of the top 10 largest payday lenders in the UK, offering loans of up to £1,000 to new customers for up to five months. A PiggyBank customer would pay an interest rate equal to an annual percentage rate (APR) of between 1,255% and 1,698%.
The company has hired HJS to carry out the administration.
Peter Tutton, the head of policy at the debt charity StepChange, said there had been a drop in the number of people struggling with payday loans debt after the spate of administrations. “While this reduction in harm is welcome, lower income households will still need access to safe, suitable and affordable credit from time to time.
“Whoever forms the next government needs a comprehensive strategy that provides greater access to affordable credit safety nets for the most financially vulnerable, including the full introduction of a no interest loan scheme.”
Jason Wassell, the chief executive of the payday loans industry body the Consumer Finance Association, also called on the next government to consider access to credit.
He said vulnerable customers could turn to less credible sources of credit, particularly over the holidays. “We are not necessarily suggesting this will lead to a rise in loan sharks, but we do suspect we will see an increase in unregulated borrowing, possibly from hard-pressed family members, and on occasion, it will be from individuals with links to criminality.”