In the early 2010s, payday loans were everywhere in the UK. These short-term loans allowed people to borrow small amounts of money, usually until their next payday.
Companies advertised heavily online and on television, promising fast approvals and money within minutes. However, these loans often came with extremely high interest rates and fees, and many borrowers found themselves trapped in cycles of repeat borrowing.
Over the last decade the UK payday loan industry has changed dramatically. Many of the biggest lenders have disappeared entirely.
So what happened?
The Payday Loan Boom
Payday lenders became extremely popular after the 2008 financial crisis, when many people struggled to access mainstream credit.
Companies offered:
- Fast online applications
- Very quick decisions
- Small loans paid directly into bank accounts
But these loans came at a cost. Some payday lenders charged annual percentage rates (APRs) running into the thousands of percent.
For borrowers who couldn’t repay the loan on time, fees and interest could quickly spiral.
The FCA Crackdown
In 2014, the Financial Conduct Authority (FCA) took over regulation of the payday loan industry.
The regulator introduced strict new rules designed to protect consumers. These included:
- A cap on interest and fees of 0.8% per day
- Default charges capped at £15
- A rule that borrowers should never repay more than 100% of what they borrowed.
These changes dramatically reduced how much payday lenders could charge.
For many companies that relied on high interest rates and repeat borrowing, the business model suddenly became far less profitable.
The Rise of Affordability Complaints
At the same time, thousands of borrowers began making affordability complaints.
Many argued that payday lenders had given them loans they could never realistically afford to repay. If a lender failed to carry out proper checks, borrowers could claim refunds of interest and charges.
As these complaints increased, lenders faced:
- Large compensation claims
- Ombudsman case fees
- Pressure from regulators
For some companies, the cost of dealing with these claims became overwhelming.
Major Payday Lenders That Disappeared
The result of all this regulation and compensation claims was a wave of collapses across the payday lending sector.
Here are some of the most well-known payday lenders that disappeared from the UK market.
Wonga
Once the most famous payday lender in Britain, Wonga went into administration in 2018 after being hit by a surge of customer compensation claims.
At its peak the company processed millions of loans, but the cost of dealing with historic complaints made the business unsustainable.
QuickQuid
QuickQuid was one of the largest remaining payday lenders after Wonga’s collapse.
In 2019 the company’s parent business entered administration and QuickQuid left the UK market.
The closure affected hundreds of thousands of customers who had taken out loans with the company.
The Money Shop
The Money Shop was one of the biggest high-street payday lenders in the UK, operating hundreds of branches.
Following regulatory pressure and falling profits, the business eventually closed its payday lending operations.
Sunny
Sunny was another major online lender that collapsed in 2020 after facing a large number of affordability complaints.
Like other payday lenders, the cost of compensation claims played a major role in the company’s downfall.
Other Lenders That Closed
Several other short-term lenders also disappeared over the same period, including:
- PiggyBank
- 247MoneyBox
- WageDayAdvance
- Peachy
- MyJar
- SafetyNet Credit
Many of these companies either went into administration or stopped offering loans in the UK.
How the Payday Loan Market Changed
The payday lending market today is much smaller than it was a decade ago.
Stricter rules and compensation claims forced many lenders out of business, and those that remain must follow far tighter regulations.
The goal of these changes was to ensure:
- Better affordability checks
- Lower borrowing costs
- More protection for consumers
However, some experts argue that the crackdown has also made it harder for people with poor credit to access short-term borrowing.
Changes for the Better
The UK payday loan industry has gone through a dramatic transformation over the last decade.
What was once a booming sector filled with dozens of lenders has been reduced to a much smaller market after new regulations, compensation claims and affordability rules forced many companies to close.
For borrowers, this shift has brought greater protection and stricter rules around lending. But it has also changed how short-term credit works in the UK.
If you are considering any type of high-cost credit, it is always worth carefully reviewing the terms and making sure the repayments are genuinely affordable.
