UPDATED: Wonga enters administration
The UK’s largest payday lender has announced it has entered administration, hours after it stopped taking new loan applications.
UPDATE: As at 5pm on Thursday 30 August, Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited have been placed into administration.
A statement read: “The boards of these entities have assessed all options regarding the future of the group and have concluded it is appropriate to place the businesses into administration. Chris Laverty, Daniel Smith and Andrew Charters of Grant Thornton UK LLP are in the process of being appointed as joint administrators.”
It added that 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. Its overseas businesses continue to trade and are not part of this announcement, it confirmed.
Wonga has an estimated 200,000 customers with outstanding loans. Existing customers should continue to pay their loans as usual and it is expected that Grant Thornton will be in touch to discuss repayments going forward. A Wonga spokesperson added that outstanding complaints will also be redirected to the administrators.
Just this morning, Wonga posted on its site that it decided to stop taking loan applications. The news came just days after reports suggested Wonga was on the ‘brink of collapse’ as it struggled to implement regulatory changes and because of historic compensation claims fuelled by claims management firms.
Over the weekend, Wonga allegedly held talks with an administrator, lined up to handle the process.
At the time, a spokesperson for Wonga, said: “Wonga recently raised £10m from existing shareholders to address the significant increase in legacy loan complaints seen across the UK short-term credit industry.
“Since then, the number of complaints related to UK loans taken out before the current management team joined in 2014 has accelerated further, driven by claims management company activity.
“Against this claims backdrop, the Wonga Board continues to assess all options regarding the future of the group and all of its entities.”
In 2014, Wonga was forced to write off interest and charges for 45,000 customers costing it £2.6m. And 330,000 customers had their balance entirely written off.
In 2016, it reported a decline in revenues from £217.2m in 2015 to £77.3m in the year to December 2015 and posted a pre-tax loss of £80.2m as it underwent a “transformation to treat customers fairly by using affordability assessments”.