Wonga administration – has the loan firm collapsed, who owns it and how do you claim compensation?
PAYDAY lender Wonga has confirmed that its UK and parent companies will go into administration.
Here's what we know about the situation so far and the impact its collapse will have on customers.
Has Wonga gone into administration?
On the afternoon of August 30, 2018, payday lender Wonga confirmed that its UK and parent companies will go into administration.
The company was kept afloat three weeks ago thanks to a £10million emergency cash injection from shareholders but it was not enough to save the firm.
According to sources, the last-minute financial injection merely encouraged a new wave of compensation claims for alleged unfair debt collection practices.
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 has been accused of targeting vulnerable customers and charging sky-high interest.
According to Sky News, the lender has filed a notice of intention to appoint administrators, believed to be Grant Thornton.
Insiders say news of the lifeline only spurred fresh legal action from claims management companies who have been circling Wonga for years.
Hours before confirming their collapse, Wonga announced it had stopped taking new loan applications.
A statement on Wonga's website read: "While it continues to assess its options Wonga has decided to stop taking loan applications."
How to claim compensation from payday lenders
IF you think you are owed compensation from a payday lender then here's how to claim according to Money Advice Online:
You'll need to prove that you couldn't afford to take out the loan, so look at your bank statements from the time that you took out the loan and look to see if you could have been able to pay back the loan, as well as pay your rent, bills and other debts.
If you took out more than one loan close to each other then this indicated that you couldn't really pay it back.
Make a list of the loans you took out, when. Log in to your online account with the lender to double check the paperwork.
If your account has been closed down you can get the information from your bank statements.
Log your income and outgoings at the time to build an affordability account.
Write detailed letters or emails to each lender, citing "unaffordable loans" and ask for a full refund of the interest and charges you paid, plus the 8 per cent Ombudsman interest on top.
Also ask for the loan to be removed from your credit record.
Wait up to eight weeks for the reponse. If you're not happy with the answer, contact the Financial Ombudsman.
What are the compensation claims?
Four years ago, the city watchdog, the Financial Conduct Authority, ordered doorstep lenders like Wonga and Quick Quid to compensate borrowers who slipped into more debt as a result of irresponsible lending before a cap was brought in in 2014.
Customers were charged sky-high interest rates on cash loans they couldn't afford to pay back pushing them further into a spiral of debt.
They were also accused of specifically targeting vulnerable borrowers.
Recently, the firms were slammed by claimant experts for "dragging their feet" over handing over the payouts.
Vincent Vernon from Pay Day Refunds said it is dealing with 32,000 customers and claims a quarter of which are with Wonga.
When was the company founded?
The firm was founded in 2006 and started offering quick-fix loans at sky high interest rates in 2007.
Business boomed in the wake of the 2008 financial crash.
At one stage it sponsored Newcastle United and it was estimated Wonga could be worth as much as £1billion.
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But claims of loan-sharking and street protests about its tactics damaged its reputation.
New loans rules introduced in 2014 and lawsuits over alleged irresponsible lending hit profits.
Wonga, owned by venture capitalists Balderton Capital, Accel Partners and 83North, lost £65million in 2016.
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