Wonga collapses after surge in payout claims

The demise of what was once one of Britain’s fastest-growing technology companies, which puts about 500 jobs at risk, had been on the cards after it stopped taking new loan applications.

It comes yesterday after the firm had received an emergency £10million cash injection weeks ago to keep it afloat.

But the fundraising triggered a fresh surge in compensation demands from claims management companies related to loans taken out before 2014.

Wonga, which had come under fire for targeting the vulnerable with high-cost, short-term loans, 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. Wonga’s overseas businesses continue to trade and are not part of this announcement.”

Customers can continue to use Wonga services to manage their existing loans. They were being told by the company that despite the collapse, they are still required to repay any outstanding money.

Grant Thornton has been appointed as administrator. Founded in 2007, Wonga promoted its brand with advertising campaigns featuring elderly puppets.

Its rapid growth fuelled ambitions of a $1billion floatation on the New York Stock Exchange. But it became beset by scandals including about 45,000 customers in arrears on loans receiving fake legal letters in order to put pressure on them.

Wonga agreed to pay £2.6million in compensation and also wrote off £220million of debt belonging to 330,000 customers after inadequate checks.

City regulator the Financial Conduct Authority said it would continue to supervise Wonga in administration.