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Abu Dhabi, UAETuesday 25 September 2018

Britain's biggest payday lender Wonga halts new loan applications

The privately owned lender is reported to be on the brink of collapse

The website of Wonga.com is seen on a computer screen in London. Reuters
The website of Wonga.com is seen on a computer screen in London. Reuters

British payday lender Wonga has stopped accepting new loan applications, according to its website, amid questions over its survival just weeks after the struggling firm completed a £10 million (Dh47.8 million) cash call.

Privately owned Wonga, which initially enjoyed rapid growth via its short-term, high interest lending often to troubled borrowers, fell into difficulty in recent years after scrutiny of its practices led to a cap on interest on payday loans.

This month, Wonga was forced to raise 10 million pounds from investors amid a surge in compensation claims related to loans taken out before 2014.

"While it continues to assess its options Wonga has decided to stop taking loan applications," a banner on the front page of its website said on Thursday.

"If you are an existing customer you can continue to use our services to manage your loan."

A company spokeswoman declined to comment further.

Wonga is the biggest and most well known firm in Britain's payday loan industry, which has faced heavy criticism from lawmakers and campaigners who say its high interest rates and marketing tactics take advantage of vulnerable borrowers.

It shot to prominence in the years after the financial crisis, filling the gap left by big banks as they retreated from short-term lending. At its peak in 2012, it was making a pretax profit of over 1.5 million pounds per week.

Six years on, Sky News says Wonga is on the brink of collapse. It reported on Sunday that its directors were preparing to appoint administrators within days.

Wonga's most recent accounts show it made a loss of £66.5 million in 2016.

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