The UK’s biggest payday lender has collapsed into administration, leaving more than a million customers facing financial uncertainty.

CashEuroNet UK, which operates the QuickQuid and On Stride brands, has stopped lending after Grant Thornton, the accountancy firm, was appointed as its administrator. The business failed a year after its rival Wonga collapsed following a surge in customer compensation claims.

Enova, the Chicago-based owner of the business, had decided to quit the UK after failing to reach agreement with the UK’s financial ombudsman over how many customers it should compensate over past loans. CashEuroNet UK accounts for up to 25% of the UK payday loans market. While CashEuroNet UK’s total customer numbers are not disclosed, the QuickQuid website claims to have served “1.4 million customers and counting”.

Payday lenders have been hit by a sharp rise in claims from customers who say they have been mis-sold loans they cannot afford. Wonga, the former industry leader, collapsed last year while The Money Shop failed in June under similar pressure.

Grant Thornton said after it was appointed on Friday there would be no new lending by the business and that customers should continue to make payments as usual.

“The joint administrators are working closely with the Financial Conduct Authority, supporting the company’s creditors and customers where possible,” Grant Thornton said.

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Payday lenders have been squeezed by political and regulatory pressure over their business model, which charges high interest rates for loans. A QuickQuid customer taking out a £250 loan for three and a half months would be charged interest rates equal to an annual percentage rate of 1,300%, according to an example on the lender’s website.

The FCA imposed affordability checks and capped payday loan charges in 2014 to stop lenders charging more in fees and interest than the amount borrowed. The changes, designed to protect vulnerable consumers, reduced the lenders’ income and triggered a flurry of customer complaints, often encouraged by claims handlers.

Consumer finance experts have said if QuickQuid customers do not keep up payments they potentially face having to pay extra charges or suffer black marks on their credit records.

For those customers who have made compensation claims against QuickQuid but whose cases are still outstanding, the outlook is not good after the official body that deals with complaints in the financial services industry said it might not be able to process any more claims.

The Financial Ombudsman Service said: “It is unlikely we will be able to progress any existing complaints about CashEuroNet [which includes QuickQuid] any further, or look at any new complaints about it.”

The Money and Pensions Service, an official body sponsored by the Department for Work and Pensions, said many customers would be feeling uncertain about what this latest development meant for them.

But Caroline Siarkiewicz, the service’s acting chief executive, said: “While you may be tempted to stop your repayments, it is crucial to keep to your regular schedule, because if you have entered into a loan agreement, you must fulfil it. If you miss any repayments, you could be hit by fees and additional charges, and it could also harm your credit rating.”

The legal obligation for customers to repay their debts will almost certainly remain unchanged, and it may be that those who fail to make their repayments have their account passed to a debt recovery agency.

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Your Lawyers, a law firm specialising in compensation cases, said an estimated 10,000 complaints against QuickQuid were outstanding and that, potentially, around 6,000 of those would be likely to have had their complaints upheld. These people may now end up out of pocket, it said. These types of complaints often relate to affordability – for example, a borrower claims that the checks a firm should have carried out were not done properly.

John Cullen, business recovery partner at accountancy firm Menzies LLP, said: “For former customers, who feel they have been taken advantage of and are in financial hardship, the future is still uncertain, as the value of any compensation payouts will now depend on the process of closing the company.

“What is clear is that in the face of growing regulatory pressures, the curtain appears to be drawing on the payday lender market.”

The ombudsman service said on its website: “We will be working with the administrators of the company to understand what that means for consumers, but it is unlikely that we will be able to progress any existing complaints about CashEuroNet any further, or look at any new complaints about it.”