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Wonga has gone into administration. It was the UK’s largest payday lender so this is huge news. It has stopped lending, but what does this mean for Wonga’s many existing customers?
What’s happened to Wonga?
Criticism of Wonga’s high-cost lending and accusations of targeting vulnerable borrowers came to a head in 2014. The Financial Conduct Authority ordered Wonga to pay out £2.6 million to 45,000 customers for unfair debt collection practices. This, along with the regulator’s introduction of price caps on payday loans the following year, cost Wonga a lot of money – the business never really recovered. Wonga filed for administration at the end of August 2018. The administrators, Grant Thornton, stated that they will wind down the business.
What does this mean for me?
Grant Thornton will now run the business and pay Wonga’s creditors. The FCA have said they will still supervise Wonga to make sure customers are treated fairly.
If you have a Wonga loan
You need to keep repaying your loan. The interest, late payment fees and repayment schedule associated with your loan will stay the same. If you need to reach Wonga, you can still do so using the same contact details as before.
If you have made a claim against Wonga
Don’t give up on your claim – but don’t expect a full payout. This is because the administrators will treat you as an ‘unsecured creditor’. When they sell off Wonga’s assets, the banks Wonga owes money to may be paid first.
However, right now it’s hard to say what the payouts to customers due compensation will look like. So if you have a potential claim for mis-selling, you have nothing to lose by putting in your complaint.
I have a loan with a different payday lender: are they likely to go the same way?
Cash Genie was liquidated in 2016 and Cheque Centre went into administration the following year. Wonga is not the only short term lender to be affected by regulation and compensation claims, and it probably won’t be the last.
by Christine WalshBack to blog home