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UK's biggest payday lender Wonga collapses

Staff Writer |
Britain's biggest payday lender Wonga Group collapsed on Thursday, saying it had decided to put its UK operations into administration against a backdrop of widespread criticism for high interest rates and marketing tactics used by the industry.

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Privately owned Wonga, which initially enjoyed rapid growth via its short-term, high-interest lending, often to troubled borrowers, fell into difficulty after regulatory scrutiny of so-called payday lenders led to a cap on interest rates.

Wonga said it had decided to place a number of its operations into administration, a form of creditor protection.

"The Boards of these entities have assessed all options regarding the future of the group and have concluded that it is appropriate to place the businesses into administration," it said.

Wonga said its overseas businesses were not part of the announcement.

In its statement, the company said that its UK business would not be accepting new loan applications, but its customers could continue to use its services to manage existing loans.

"The FCA will continue to supervise Wonga once it is in administration and is in close contact with the proposed administrators with regard to the fair treatment of customers," Britain's financial watchdog said in a statement.

Wonga had just raised 10 million pounds ($13.01 million)from investors amid a surge in compensation claims related to loans taken out before 2014.

Media reports had pegged Wonga's valuation, before its fresh capital injection, at 23 million pounds, a far cry from an estimated valuation of around $1 billion when it was considering a New York stock market listing.

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