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Wonga collapses into administration Wonga collapses into administration
(35 minutes later)
Britain’s biggest payday lender, Wonga, has collapsed into administration following a surge in customer compensation claims.Britain’s biggest payday lender, Wonga, has collapsed into administration following a surge in customer compensation claims.
In a statement issued shortly after 5pm on Thursday, Wonga said: “A decision has been taken to place Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited into administration.In a statement issued shortly after 5pm on Thursday, Wonga said: “A decision has been taken to place Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited into administration.
“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.”“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.”
Grant Thornton has been appointed as administrator, and will seek to find a buyer for the company’s loan book, believed to be about £400m owed by more than 200,000 borrowers. Grant Thornton has been appointed as administrator and will seek to find a buyer for the company’s loan book, believed to be about £400m owed by more than 200,000 borrowers.
Customers are being told to continue making payments on their outstanding loans.Customers are being told to continue making payments on their outstanding loans.
“Wonga customers can continue to use Wonga services to manage their existing loans but the UK business will not be accepting any new loan applications,” the company said. “Wonga customers can continue to use Wonga services to manage their existing loans, but the UK business will not be accepting any new loan applications,” the company said.
Wonga, which has been holding emergency talks with the City regulator, stopped taking new loan applications on Thursday.Wonga, which has been holding emergency talks with the City regulator, stopped taking new loan applications on Thursday.
The message on its website still says that while it is continuing to assess its options it will no longer be lending. The message on its website says that while it is continuing to assess its options, Wonga will no longer be lending.
Customers deluging Wonga’s helpline were greeted with an automated message saying there were delays in answering “because of an exceptionally high volume of calls”.Customers deluging Wonga’s helpline were greeted with an automated message saying there were delays in answering “because of an exceptionally high volume of calls”.
In its last reported accounts, published in September 2017, Wonga said it had 220,000 customers and £430m in loans outstanding. Despite losses of £66.5m, it said at the time that costs and impairments were falling and that it remained a going concern. In the company’s most recently reported accounts from September 2017, Wonga said it had 220,000 customers and £430m in loans outstanding. Despite losses of £66.5m, it said at the time that costs and impairments were falling and Wonga remained a going concern.
But since then Wonga has been hit by a wave of compensation claims, each of which cost the company £550 to process, whether the claim is upheld or not. Many have come from claims management companies, such as PaydayRefunds, which said it had entered about 8,000 claims against the lender. But since then, Wonga has faced a wave of compensation claims, each of which cost the company £550 to process, whether the claim is upheld or not. Many have come from claims management companies such as Payday Refunds, which said it had entered about 8,000 claims against the lender.
Wonga raised an emergency £10m from shareholders as recently as early August, but the extra cash appears to have accelerated the flow of compensation claims. Wonga raised an emergency £10m from shareholders in early August, but the extra cash appears to have accelerated the flow of compensation claims.
Labour’s shadow economic secretary, Jonathan Reynolds, said he would not mourn the demise of Wonga. “Its business model was exploitative and immoral. Wonga had become a testament to so much that is wrong with our economy – too many people stuck in insecure employment reliant on short-term debt just to keep their heads above water. The shadow economic secretary to the Treasury, Jonathan Reynolds, said he would not mourn the demise of Wonga. “Its business model was exploitative and immoral. Wonga had become a testament to so much that is wrong with our economy – too many people stuck in insecure employment reliant on short-term debt just to keep their heads above water,” he said.
“We need urgent action from the government to change this broken model and review the way lending is regulated.”“We need urgent action from the government to change this broken model and review the way lending is regulated.”
Borrowers hoping to escape their debt burden thanks to the collapse of Wonga are likely to be disappointed. The company’s loan book will be sold to the highest bidder, which will then have the right to receive the interest on the loans.Borrowers hoping to escape their debt burden thanks to the collapse of Wonga are likely to be disappointed. The company’s loan book will be sold to the highest bidder, which will then have the right to receive the interest on the loans.
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