More than 400 staff at The Money Shop are facing redundancy as the major pawn broking and cash loans company – Instant Cash Loans Limited (ICL) – ceases trading.
In a letter sent to employees and seen by This is Money, ICL said it plans to close or sell off all of its UK stores following ‘poor financial performance’ and an ‘unprecedented number of customer complaints’.
As a result, the Nottingham-based company has launched a mass redundancy process with its 427 staff across its head office and stores.
ICL, which trades under The Money Shop, is facing collapse, putting 400 jobs at risk
The company, which offers payday loans, cheque cashing and gold for cash, pledged to ‘seek a positive outcome for both the employees and the company’.
‘The proposal to make collective redundancies is considered appropriate due to the poor financial performance of Instant Cash Loans Ltd (ICL).
‘This is a result of the unprecedented number of customer complaints received by the business from claims management companies which relate to previous behaviours and conduct of the business towards its customers, pre FCA,’ the letter read.
ICL added that, as a result, it is ‘no longer viable to continue trading’ and it will ‘look into’ the possible sale of its stores and pledge books.
Complaints about payday lenders soared 130 per cent last year, according to The Financial Ombudsman Service, which slammed some lenders’ behaviour as ‘unacceptable’.
The Money Shop, previously owned by Dollar Financial UK, came under fierce scrutiny in 2014 when the FCA took action against payday lenders.
The Money Shop also got into trouble previously with the ASA for misleading advertising
In 2015, it was forced to pay out £15million in compensation after the watchdog found that customers may have suffered as a result of the firm’s affordability checks, debt collection practices and system errors.
According to a notice on The Money Shop website, some stores have already shut down and 97 are still in operation.
ICL has proposed a phased redundancy timetable as it winds down the 27-year old business.
Earlier this year, rival financial services provider and jewellery retailer Ramsdens bought 18 stores from ICL for £1.5million.
The collapse threatens to add to the mounting number of empty sites on UK high streets as retailers, restaurants and bookmakers withdraw from bricks-and-mortar amid challenging conditions.
ICL has been contacted for comment.