Authorization

Wonga stops taking new loans amid collapse fears

By James Sillars, business reporter
Struggling payday lender Wonga has stopped taking new loans, heightening speculation its efforts to avoid administration are faltering.
After Sky News revealed last weekend the controversial company was working to avoid the risk of collapse within weeks, Wonga confirmed on its website on Thursday it is no longer accepting applications for new business.
The 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's woes have been blamed on a combination of tighter regulation and a surge of compensation claims relating to its past lending.
Wonga stops taking new loans amid collapse fears

Image:
Wonga used to sponsor Newcastle United
Just five years ago it was targeting a flotation on the New York Stock Exchange as it raked in cash from short-term loans taken out by consumers struggling in the wake of the financial crisis and subsequent recession.But its annual percentage rates (APRs), of up to 5,800%, attracted fury and subsequent interest from regulators who took aim at the wider high cost credit sector from 2014.It resulted in a series of new regulations and fines for Wonga, which has been loss-making for several years.Sky's City editor Mark Kleinman reported earlier this month how Wonga, owned by Balderton Capital, Accel Partners and 83North, had received an emergency €10m cash injection to keep it afloat.However, that cash call is understood to have sparked a spate of fresh compensation demands on behalf of customers by claims management companies.They have focused on its lending criteria - determined by an algorithm - before the Financial Conduct Authority introduced caps on the short-term credit market four years ago.
Wonga stops taking new loans amid collapse fears

Image:
Protesters demonstrate against Wonga in central London in 2014
Business services group Grant Thornton has been lined-up as administrator should Wonga collapse.
Such a move would threaten 500 jobs.Wonga has moved to improve its image in recent times by shifting away from short-term credit towards flexible loan packages.Its woes are in stark contrast to banks, which have recently reported steady lending and, largely, strong profit growth.Another player in the lending sector to report on progress on Thursday was Amigo - a mid-cost credit provider which listed in London during the summer.In its first quarterly results the company, whose name translates as 'friend' in Spanish, said customer numbers in the three months to 30 June were up 39% on the same period last year at 194,000.Revenue and profits were also sharply up - with its chief executive crediting a fair and transparent approach to customers.Glen Crawford said: "The continuing strong growth in our customer numbers, loan book and revenues reflect the increasing market penetration of our product and positions Amigo well for the future."Our successful IPO (Initial Public Offering) was a key milestone for Amigo and its employees, allowing us to bring our product to a wider customer base."We offer a single product - a guarantor loan at a fixed APR of 49.9% to those who are unable to access traditional sources of finance due to their credit history.
More from Business

Google hits back at Donald Trump's latest bias claim


Panasonic runs from Britain over fears UK will be tax haven after Brexit


France 'prepared' to help forge EU deal with UK after Brexit


SSE merger with npower provisionally cleared by regulator


Hot September could burn ?320m of UK retail sales


Vodafone's Australia operation in $15bn merger with TPG

"There is significant growth potential for Amigo in the UK and we already occupy an unrivalled first mover position as a guarantor lender in the UK mid cost credit space."We expect further strong growth in the demand for mid cost credit products which we are well positioned to meet."
See also:
Leave a comment
News
  • Latest
  • Read
  • Commented
Calendar Content
«    Сентябрь 2018    »
ПнВтСрЧтПтСбВс
 12
3456789
10111213141516
17181920212223
24252627282930