Britain’s biggest payday lender, Wonga, is teetering on the brink of collapse following a surge of customer compensation claims in recent weeks that could cause it to call in administrators.
The short-term loan provider has reportedly lined up accountancy firm Grant Thornton to handle a potential administration of the company should its board believe it is unable to avoid falling into insolvency. The report from Sky News said Wonga could appoint Grant Thornton as soon as this week.
The flood of claims facing the company relate to loans taken out before 2014, when Wonga was the poster child for outrage in the payday lending industry that resulted in rules capping the cost of borrowing. Campaigners claimed the firm and others in the industry fleeced consumers with high interest rates and targeted vulnerable customers with slick marketing.
Wonga has shown signs of mounting difficulties in recent weeks. Earlier this month, it emerged the company received a £10m emergency cash injectionfrom shareholders to save it from going bust. At the time, a spokesman said the firm was facing “a marked increase in claims related to legacy loans, driven principally by claims management company activity”.
Should the company fall into administration, it would signal a remarkable fall from its previous status as one of the fastest-growing financial companies in the UK. The company was once touted for a stock exchange listing that could have valued it at more than $1bn (£780m) but was recently reported to be worth just $30m.
For more read the full of article at The Guardian
