Wonga collapses into administration

Alamy

Payday lender Wonga has gone into administration after losing her battle to stay afloat.

The company said in a statement that he had evaluated all the options and had decided that management was the only option.

Already had stopped accepting new loan applications as it struggled to avoid collapse.

His disappearance is still an increase in compensation claims in the midst of a government clampdown on pay-day lenders.

Grant Thornton will act as administrators.

In a statement Wonga said: “Customers can continue to use Wonga services to manage their existing loans, but the business in the uk will not be accepting any new loan applications. Customers can find more information in the web page.
Wonga: Where have all borrowers have gone?
What has gone wrong with Wonga?

“Wonga the foreign companies to continue to trade and are not part of this announcement.”

Wonga, which was the uk’s biggest payday lender, had faced criticism for its high cost, short-term loans, seen as targeting the vulnerable.

In 2014, the Financial Conduct Authority found that Wonga of debt collection practices were unfair and ordered the payment of £2.6 m to compensate 45,000 customers.

Since then, the companies of payday loans have faced more stringent standards and have their fees covered.

This coup Wonga profits hard. In 2016, posted pre-tax losses of almost £65m, despite claiming his business had been “transformed”.

It continued the legacy of the complaints and was forced to seek a bailout of its sponsors in August amid a flurry of claims.

It was a huge fall from grace for Wonga, which in 2012 was promoted to explore a us stock market flotation that would have valued at more than $1bn (£770m).

Analysis: Kevin Peachey, personal finance reporter

Wonga never considered himself to be a creditor of day of payment, preferring instead to describe himself as a maverick of the technology of the company that happened to sell loans.

Their technology was innovative, allowing the generation of smartphone to choose how much they wanted to borrow with the slide of a thumb.

That comfort, coupled with a huge advertising campaign with fun puppets and voice-overs proved to be a success. At the height of their success in 2013, Wonga had a million customers.

But Mick McAteer, founder of the not-for-profit Financial Inclusion Centre, said that this demand was a bubble: “They were flogging [credit] and create a demand for the same.”

In other words, some borrowers simply did not need to borrow from a payday lender, but were attracted to these high-cost, short-term loans anyway.Read Kevin’s piece in its entirety here