Wonga payday business on & # 39; edge of collapse after massive compoclaims from customers & # 39;

Wonga is about to collapse after mass claims from customers, it is claimed.

Thousands have demanded money from the controversial publishing of payday loans above the astronomical interest rates.

Wonga had charged up to 5.853% before being ordered to stop.

Labor's Meg Hillier said, "There will not be many tears if Wonga leaves."

The company, which provides loans to the needy, said it "reviews all options".

Wonga was able to call on administrators this week because it came under a flood of compensation claims for customers, so it reported tonight.

Tens of thousands of people are looking for payouts after getting loans that have dragged them further into debt.

A TV advertisement for payday giver Wonga

The Financial Conduct Authority set a limit on the payment rates in 2014 and ordered companies to adjust loans to borrowers that paid sky-high rates on short-term loans.

But the mirror recently revealed that millions of pounds in payouts still have to be claimed by lenders such as Wonga who are accused of having turned their heels back to pay back customers.

An FCA investigation found between 2008 and 2010 Wonga sent threatening letters to customers afterwards from non-existing law firms.

At a certain moment the company calculated an annual interest rate of a maximum of 5,853%.

But it is about to collapse, despite raising £ 10million of shareholders in an attempt to keep their heads above water.

Labor's Stella Creasy, who led a campaign against payday providers, said: "Wonga's downfall shows that these companies are built on exploiting British dollars and why regulations were needed to protect them." Vincent Vernon of Pay Day Refunds said that it handles 32,000 customer claims, a quarter of them from Wonga.

He added: "There may be more than one million customers who suffer from irresponsible lending and who have money." Three of the poorest responders are Wonga, Curo and Quick Quid, and they continue to ignore British consumer rights. borrow and extremely slow to repay. "

Labor MP Stella Creasy

PvdA MP Meg Hillier added: "Not many tears will be shed when Wonga leaves."

The FCA limit on interest rates led to a fall in the ups and downs of the once profitable company with 500 employees. In 2015, the losses more than doubled to £ 80.2 million and it has the loss of £ 65million the following year.

Wonga has reportedly been in talks with the FCA to discuss the company's options and appoint Grant Thornton as trustees.

If it goes bankrupt, customers owing cash are covered by the Compensation Scheme for financial services. The FCA declined to comment.

The company has sponsored Newcastle

The lender said: "Wonga recently raised £ 10 million from shareholders to address the significant increase in old loan complaints, and the number of complaints relating to loans taken out before the current management team joined in 2014 has accelerated.

"The Wonga Board continues to review all options relating to the future of the Group and its entities."

Wonga was founded in 2006 by the South African businessman Errol Damelin. The ads contain "cuddly" puppets of the elderly. It has once sponsored Newcastle United shirts.

The biggest payday loaner in Great Britain, in 2012 four million loans to more than one million customers.

Good riddance, says friend of & # 39; victim & # 39;

From Matthew Young

The best friend of a teenager who committed suicide when Wonga emptied his bank account, is pleased with the news that the payday business probably goes bankrupt.

Kane Sparham-Price, 18, remained without money when the company withdrew money in 2013 under a legal debt agreement. He took his own life that day. Speaking in front of the mirror tonight, friend Stefan Williams (23) said: "Thank God it seems like it's going bankrupt.

Kane Sparham prize

"It's just a shame that it has affected so many people.

"My thoughts are with everyone whose relatives or friends have committed suicide because of companies like this."

There is no suggestion that Wonga acted illegally.

But at the moment the South Manchester coroner John Pollard called for a change in the lending fees to stop similar deaths.

The judicial investigation also found that Kane, of Ashton-under-Lyne, suffered mental health problems.

How you can claim

You can file a complaint if you have been further indebted by a payday provider if it should have known better.

To claim, look for the addresses where you lived when you took out the loans to help the companies find your account information.

Write down what you remember when you closed the loans – how easy it was or that they offered more cash.

Explain your financial situation at the time, how borrowing affected you and whether you had loans from more than one company.

A compensation company can do it for you, for a small discount on your payout.

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