Wonga punters are in the dark as it teeters on brink
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Tens of thousands of Wonga customers were left in the dark on Tuesday as the payday lender considers its future, with administration a clear possibility.
While the firm’s many critics may delight in its demise, it would hit borrowers who rely on the lender to make ends meet, and around 500 staff who could face the chop.
Grant Thornton has reportedly been lined up to act as administrator, but neither it nor Wonga would confirm this or go beyond a statement admitting it is looking at “all options”.
Wonga has been hit by a surge in compensation claims from people overcharged for loans before 2014. It said the number of complaints has “accelerated further” recently. Customers owed compensation could lose out if the firm does go under.
Consumer debt websites say Wonga is still making loans at present.
In 2014, the Financial Conduct Authority ordered Wonga and others to compensate borrowers who had fallen into greater debt due to irresponsible lending.
A cap was brought in and Wonga had to pay £2.6 million in compensation to 45,000 customers over misleading practices.
King’s College London professor Nick Butler said: “No tears for Wonga. But spare a thought for those living on the edge who will be forced into the far more unpleasant hands of unregulated back-street lenders who charge even more and who are ruthless in collecting.”
Which? urged customers to check the terms of their loan relating to the lender’s ownership and not to assume their debts may be written off.
The FCA is understood to have been keeping tabs on Wonga since it told the regulator it was in financial difficulty.
Wonga business boomed in the wake of the 2008 financial crash and it was valued at £1 billion at one point. Wonga is now owned by venture capital firms and led by chairman Andy Haste.