Major UK Loan Firm Enters Liquidation And Now All Their Customers' Debts Have Been Wiped Out - Are You One Of Them?

Fernwood Financial Limited, a major UK payday loan firm, has collapsed into liquidation, wiping out debts for thousands of customers overnight. The Financial Conduct Authority (FCA) confirmed the firm's insolvency on 27 June 2025, sparking relief for borrowers but raising concerns about the stability of the short-term lending sector.

As the cost of living crisis continues to grip the UK, this development highlights the risks of high-cost loans and the need for consumer vigilance.

Fernwood Financial's Collapse

Fernwood Financial Limited, based in the North West, entered liquidation on 27 June 2025, as announced by the FCA. The firm, which offered high-cost short-term credit, ceased trading after failing to meet financial obligations, leaving thousands of customers free from their loan repayments.

Administrators from Leonard Curtis were appointed to oversee the process, confirming that all outstanding customer debts have been cancelled. The FCA stated that the customers do not need to make any further payments to the firm. This follows a pattern of payday lender failures, with 247Moneybox and Fund Ourselves Limited collapsing in 2019 and 2024, respectively.

An X post from @UKMoneyWellness on 22 August 2025 noted, 'Debts written-off for customers of collapsed payday loan firm – how to spot a payday loan scam'. The firm's downfall is attributed to stricter FCA regulations and unsustainable lending practices, with industry experts estimating losses of £5 million ($6.7 million) for creditors.

Impact on Customers and the Lending Sector

The liquidation offers significant relief for Fernwood's customers, many of whom faced high interest rates often exceeding 600% APR. For example, a typical £200 loan could accrue £150 in interest over three months, based on industry standards. The debt cancellation affects an estimated 10,000 borrowers, though exact figures remain undisclosed.

Martin Lewis, founder of MoneySavingExpert, commented on similar collapses, stating, 'These irresponsible firms fell to the weight of unaffordable mis-selling claims and the regulator's price cap.'

However, the collapse raises questions about the sector's viability. The FCA's crackdown, including affordability checks, has squeezed lenders like Fernwood, with Indigo Michael also nearing collapse in 2023 after similar restrictions.

An X post from @MetroUK on 22 August 2025 stated, 'UK loan company goes bust and wipes debt for thousands of customers overnight'.

The insolvency of Fernwood, which employed 40 staff, may lead to job losses and reduced access to credit for vulnerable consumers, particularly amid rising energy and food costs.

Consumer Advice and Future Outlook

The FCA advises Fernwood customers to check their credit reports to ensure debts are removed and to be wary of scams targeting former borrowers. If you're contacted unexpectedly by someone claiming to be from Fernwood Financial or Aurora Recovery, please end the call, the FCA warned, citing a rise in fraudulent schemes following lender collapses.

The regulator encourages affected customers to contact administrators via Leonard Curtis's dedicated helpline, operational since 1 July 2025. Experts urge borrowers to explore alternatives like credit unions, which offer loans at capped rates of 42.6% APR. The cost of living crisis, with inflation at 2.2% in July 2025, continues to drive demand for short-term credit, but the sector faces uncertainty.

As the UK navigates economic challenges, including a delayed energy meter switch-off affecting 400,000 households, consumers are urged to seek financial advice from reputable sources like Citizens Advice.