Wonga no longer
Loan firm go bust.. but borrowers told they have to keep coughing up
PAYDAY lenders Wonga have gone bust – but hundreds of thousands of customers will still have to pay back their loans with the firm.
They go into administration today after a “very significant” surge in compensation claims they did not have the cash to pay, from customers who say they were given loans at rip-off rates they could not afford.
But those claimants are likely to be near the back of the queue for any cash from the firm now. Those near the front include finance firm Kreos Capital, who are understood to have loaned Wonga £27million in 2016.
Big shareholders who injected £10million into the business last month are further down the line.
Some 220,000 customers with outstanding loans are still expected to cough up, it is understood. The future of Wonga’s 500 staff is in doubt.
Bosses at the firm said they had “assessed all options regarding the future of the group and have concluded that it is appropriate to place the businesses into administration”. Steve Turner of Unite said Wonga’s “chickens had come home to roost”. He added: “Bosses walk away having got fat pay cheques but it’ll be customers owed compensation at the back of queue.” Martin Lewis, founder of Money SavingExpert.com, said: “They were giving loans to all and sundry, many of whom could not afford it and should not have been lent to.” South African Errol Damelin founded Wonga in 2006. In 2014, they were fined after sending threatening letters from fake law firms. The same year, Wonga wrote off £220million debts for 330,000 struggling UK customers, and a cap on payday interest rates was set by the Financial Conduct Authority. Tara Waite took over as group chief executive in 2016 as part of a bid to overhaul the business. A report by administrators Grant Thornton will be sent to the Insolvency Service.