Administrators have been appointed but customers with outstanding loans should continuing paying as usual but new loans will not be issued from either company.
The administrators have already warned customers with outstanding claims about mis-selling will likely receive considerably less compensation than their accepted claim amounts.
They are the latest in a spate of collapses which have removed big names like Wonga and QuickQuid from the market.
Peachy was one of the largest short term lenders left in the UK market following the demise of many major rivals over recent years.
They claimed to have provided loans to two million customers since 2010, although reports suggest they had 29,000 customers at the time of their collapse.
Advice on Peachy's website confirms customers with outstanding unaffordability claims will be viewed as unsecured creditors and therefore they're unlikely to receive the true value of their compensation. This is the case even for those customers already in possession of 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.
Cash on Go's other brand Uploan is less widely known as it only started trading in 2019 offering loans of between £500 and £2,000. While there may be outstanding complaints for that brand, the scale is likely to much smaller.
Most of the problems payday lenders are experiencing stem from a range of reforms implemented by the FCA including caps on interests rates, fees and charges first mooted back in 2014.
This was followed by more stringent affordability checks on potential customers, and this is where many lenders have struggled with compensation claims from customers who believe they were mis-sold their loans.
Such claims have undoubtedly contributed to Peachy's collapse, although it's unlikely they have the 10,000 outstanding complaints QuickQuid had at the time of collapse.
Payday loans and other short term high cost forms of lending are often the last resort for customers struggling to get credit elsewhere.
Consequently, they come with high interest rates that can leave a customer paying excessively for the privilege of accessing credit. For some customers, this traps them into a continuous circle of debt.
However, just because the market shrinks, it doesn't necessarily follow that demand for short term high cost credit is shrinking, and there are concerns that customers could be pushed towards unregulated lenders such as loan sharks.
We've got a guide on the alternatives to short term loans which also discusses how customers can check whether a provider is authorised and what the rules are around short term credit.
There's also a dedicated guide to credit unions. To learn more about this alternative to payday loans, click here.
Choose has a variety of resources to help customers facing debt problems. Learn more about the rules surrounding debt and mental illness here or read our five step guide to budgeting and going debt free here.
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