Wonga payday firm stops offering new loans" width="624" height="351">
Wonga's adverts featuring puppets were controversial and eventually cut
Payday lender Wonga has said it is no longer accepting new loan applications as it teeters on the brink of collapse.The company said in a statement on its website that it was continuing to "assess its options" and existing customers could still use their services to manage their loans.It follows a surge in compensation claims against the firm amid a government clampdown on payday lenders.Reports say the firm has lined up Grant Thornton to act as administrators.Wonga, the UK's biggest payday lender, has faced criticism for its high-cost, short-term loans, seen as targeting the vulnerable.
Wonga: Where have all the borrowers goneWhat's gone wrong with Wonga?
The company's statement 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.'Wonga has previously said it will make a decision about its future within weeks.
Analysis: Kevin Peachey, personal finance reporterWonga never considered itself to be a payday lender, preferring instead to describe itself as a maverick technology company that happened to sell loans. Its technology was groundbreaking, allowing the smartphone generation to choose how much they wanted to borrow with the slide of a thumb.That convenience, matched with a huge advertising campaign featuring amusing puppets and upbeat voiceovers, proved a hit. At the height of its success in 2013, Wonga had a million customers. But Mick McAteer, founder of the not-for-profit Financial Inclusion Centre, said this demand was a bubble: "They were flogging [credit] and they created demand for it."In other words, some borrowers simply did not need to borrow from a payday lender, but were attracted towards these high-cost, short-term loans anyway.
Read Kevin's piece in full here
In 2014, the Financial Conduct Authority found that Wonga's debt collection practices were unfair and ordered it to pay ?2.6m to compensate 45,000 customers. Since then, payday loan companies have faced tougher rules and have their charges capped.This has hit Wonga's profits hard and in 2016 it posted pre-tax losses of nearly ?65m, despite claiming its business had been "transformed".It has continued to face legacy complaints and was forced to seek a bailout from its backers this month amid a surge in claims. It marks a huge fall from grace for Wonga, which in 2012 was touted to be exploring a US stock market flotation that would have valued it at more than $1bn (?770m).Are you a current or former Wonga customer? Share your experiences by emailing include a contact number if you are willing to speak to a BBC journalist. You can also contact us in the following ways:
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