In the News
Is Wonga on the brink of collapse?
27th August 2018
Can't be long left for Wonga. It's hard to imagine any sane investor wanting to provide rescue capital to a business with large, increasing and uncertain contingent liabilities such as a compensation claim. It must be a black hole.
Little more than five years ago, Wonga was anticipating a $1 billion floatation on the US stock market and they gambled on a multi-million pound shirt sponsorship with Newcastle United. Now - on some estimates, the business is worth less than £30 million.
Crucial to their commercial undoing was the decision by the Financial Conduct Authority (FCA) to introduce caps to the interest rate and total interest that could be paid on un-secure, short-term loans.
EXCLUSIVE: The payday lender Wonga is on the brink of appointing administrators following a surge in compensation demands led by claims management firms, and weeks after an emergency £10m capital injection from existing shareholders. https://t.co/W6NfnO5fcA
— Mark Kleinman (@MarkKleinmanSky) August 26, 2018
When reading stories about wonga please remember that high street banks charge more for unarranged overdrafts than wonga does and still get away with it.
— Dominic Lindley (@DominicLindley) August 26, 2018
Wonga on brink of collapse after customer compensation claims deluge https://t.co/MrN5zFcPt3
Maybe social entrepreneurs will come forward who genuinely want to provide a fair deal to the payday poor? Maybe an organisation called a BANK? https://t.co/6CBYhA90ug
— Andrew Adonis (@Andrew_Adonis) August 27, 2018
If Wonga does collapse, its assets should be used to begin building up a new system of banking and lending, backed by government, for families on low incomes, thereby reducing further the need for high cost credit: https://t.co/23TjWAm1bT
— Frank Field (@frankfieldteam) August 27, 2018
This article from the Financial Times considers some of the possible effects on the market for high cost credit if Wonga departs the scene:
Wonga woes won’t end the scourge of high-cost credit https://t.co/0CCre5DwvK
— Finance News (@ftfinancenews) August 30, 2018
Geoff Riley
Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.
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