The UK’s largest payday lender is shutting down after increasing complaints from former clients.
The news is not a total surprise. This week the company stopped accepting new loan applications, and also met with the Financial Conduct Authority (FCA) to determine the impact the closure would have on its clients.
While the company received an emergency cash injection of £ 10million earlier this month, it also saw a further surge in compensation claims, with a source claiming complaints have risen 80% since the start of the month. receipt of funds. Each complaint costs Wonga £ 550 in fees even before compensation is issued, which is more than the lender’s average loan amount.
Founded in the UK in 2006, Wonga had raised a total of around £ 145.5million 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.
After admitting that its algorithmic technology loaned money to people who couldn’t repay it, Wonga agreed to cancel loans for 330,000 clients, as well as waive interest and fees for an additional 45,000. The company was also censored by the FCA for sending bogus letters from lawyers to late-paying clients, forcing the company to pay an additional £ 2.6million in compensation.
Wonga’s foreign operations in Poland, South Africa and Spain will not be affected and will continue to do business, the company added. But four units will go into administration: Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited.
“The boards of these entities assessed all options for the future of the group and concluded that it was appropriate to place the companies under administration,” Wonga said.