Loans

Wonga Stops Taking New Loan Applications

Payday Loans

Wonga, the U.K.-based payday lender, has halted accepting new loan applications.

The Guardian, citing the company, reported that a statement on Wonga’s Website said: “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.” The statement comes as the company is struggling to stay afloat and tapped Grant Thornton to act as administrator if the board of Wonga decides it can’t be saved. The report noted that this week Wonga held discussions with the Financial Conduct Authority about what impact it going under would have on its existing customers. An announcement on the company’s future is expected later Thursday (August 30), noted the report.

This comes after Wonga said over the weekend that it was looking at all options. Wonga blamed its problems on a significant increase in people making claims, with a number of the complaints having to do with loans in the U.K. taken out prior to 2014. “Against this claims backdrop, the Wonga board continues to assess all options regarding the future of the group and all of its entities,” the company said over the weekend, reported The Guardian. Wonga has faced a ton of backlash due to the interest it charges on its loans and it has been accused of going after vulnerable borrowers.

Founded in the U.K. in 2006, Wonga had raised a total of around £145.5 million from investors including Accel, Oak Investment, Meritech Capital and 83North, while a 2009 Series B included Accel, Balderton, Dawn Capital, HV Holtzbrinck Ventures and 83North. But after admitting its algorithmic technology had been lending money to people who couldn’t pay it back, Wonga agreed to write off the loans of 330,000 customers, as well as waive the interest and fees for an additional 45,000. The company was also censured by the Financial Conduct Authority (FCA) for sending fake lawyers’ letters to customers in arrears, which led to the company being forced to pay out a further £2.6 million in compensation.

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