Home Recent Landlord News Rumours Wonga maybe on brink of collapse

Rumours Wonga maybe on brink of collapse

WONGA-THE-BLA-SMALLPayday lender Wonga has reported that it is considering “all options”.

Recent reports in the media suggested it was on the brink of collapse.

The problems it is said stem from a surge in compensation claims against Wonga. The demise maybe amid a government clampdown on payday lenders.

According to Sky News, the firm has lined up Grant Thornton to act as administrators in the event it becomes insolvent. It is likely Wonga will have to take steps and decide on its options.

Wonga has had a barrage off criticism for its high cost, short term loans. Wonga has been criticised for targeted the vulnerable.

In 2014 the Financial Conduct Authority “FCA” found Wonga debt collection practices were unfair and was ordered to pay £2.6m to compensate 45,000 Wonga customers.

Several 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.

According to Sky the firm is looking at the possibility of a pre-pack administration process similar to that used recently by House of Fraser.

However, it could also look to sell assets, including its Polish subsidiary to bolster its cashflow.

It has held detailed talks with the Financial Conduct Authority, the City regulator, about its options, Sky reported.

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).

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