Wonga goes bust as payday lender stops taking new loan requests
PAYDAY lender Wonga has collapsed into administration and stopped taking new loan applications.
The firm has appointed administrators to take over the running of the business and existing customers are being advised to carry on re-paying their debts.
In a statement, Wonga said: "The Boards of these entities have assessed all options regarding the future of the Group and have concluded that it is appropriate to place the businesses into administration.";
Wonga was processing thousands of compensation claims from borrowers accusing it of irresponsibly lending, targeting vulnerable customers and charging sky-high interest back in 2014.
It was kept afloat three weeks ago thanks to a £10million emergency cash injection from shareholders.
But Wonga said the cash injection only led to an influx of new claims and the firm has been unable to cope with the demand.
Wait up to eight weeks to hear back from them. If you're not happy with the answer, or they don't get back to you, contact the Financial Ombudsman.
This morning Wonga announced that it has stopped lending to new customers and said existing customers should "continue to use our services to manage your loan".
Grant Thornton has been appointed to act as administrator just days after the company held emergency talks with the Financial Conduct Authority (FCA) over the impact of its collapse on existing customers.
In 2014, the firm brought in a new management team and wrote off £220million worth of debt belonging to 330,000 customers after admitting handing out loans to people who could not afford to repay them.
In the same year, the FCA said it would bring in stricter affordability checks to the industry and introduce a cap on the cost of payday loans.
The rules introduced by the FCA four years ago also affected other payday lenders.
Recently the firms were slammed by claimant experts for "dragging their feet" over handing over payouts.
Vincent Vernon from Pay Day Refunds said it is dealing with 32,000 customers and claims a quarter of which are with Wonga.
Read our guide to finding out whether you're entitled to compensation and how to claim the cash.
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