The company has attracted criticism for targeting vulnerable people
The payday loan company Wonga has announced it is no longer taking new loan applications as it nears collapse.
The move comes after it received a £10 million cash injection to save the company from entering insolvency last month, with it emerging over the weekend it had lined up Grant Thornton to act as administrator in the event it cannot be rescued.
A statement on Wonga’s website reads: “While it continues to assess its options Wonga has decided to stop taking loan applications.
“If you are an existing customer you can continue to use our services to manage your loan.”
It is believed the company will make a further statement on its future on Thursday. Investors in the company include Accel Partners and Balderton Capital.
The company’s collapse would threaten 500 jobs.
Wonga was formed in 2004, quickly becoming one of the most recognisable payday loan companies in the country – sponsoring football teams such as Blackpool, Hearts, and Newcastle. However, the company has attracted criticism for targeting vulnerable people. Prior to the introduction of tighter financial regulations its annual percentage rates (APRs) reached up to 5,800%.
In 2014, the lender admitted making loans to people who could not afford to repay them and wrote off £220m of debt belonging to 330,000 customers.
What should be doing is saying it will honour all the compensation it owes to customers it exploited….hoping govt will also respond to call for cap on all forms of credit to help stop future wongas too. Please RT to remind them waiting for an answer on that one… #sharkstoppers https://t.co/wEy2mkwRrl
— stellacreasy (@stellacreasy) August 30, 2018
Labour MP Stella Creasy, who has campaigned against payday lending, welcomed the company’s troubles. She wrote on Twitter that the company needed to “honour all the compensation it owes to customers it exploited”, adding that the government should “respond to call for a cap on all forms of credit to help stop future Wongas”.
