LONDON, Aug. 30 (Xinhua) -- British payday loan company Wonga on Thursday announced that it is going into administration along with its parent company.
Wonga has filed its notice of intention to appoint administrators. The announcement came just hours after the short-term lending firm stopped offering new loans.
Wonga offers "short-term, high-cost credit." The interest charged by the lender, which can reportedly equate to an annual percentage rate of 1,509 percent, has been widely criticised.
The company said in a statement that it had assessed all options and had decided that administration was the appropriate route.
It had already stopped accepting new loan applications as it fought to stave off collapse. Its demise in Britain follows a surge in compensation claims amid a government clampdown on payday lenders.
High-cost short-term loans include the classic 30-day loans, but also the longer, and newer, three-month loans. In 2016, payday customers typically had nearly three of these loans, although one in 10 had taken out 12 or more.
There are more men (62 percent) than women who have these debts. Their average income is 20,400 pounds (26,550 U.S. dollars), compared with a national average of 26,370 pounds (34,308 U.S. dollars).
The majority (76 percent) had no savings to fall back on. Of the remainder, the typical amount set aside was 177 pounds (230 U.S. dollars).
This is a problem as 68 percent of these consumers were struggling to pay their bills, and they had average debts, excluding mortgages, of 4,700 pounds (6,117 U.S. dollars).
The controversial loans company which charges vast interest rates has received a flood of customer compensation claims.
The bulk of complaints against Wonga relate to loans made before 2014, when payday loans companies were accused of taking advantage of vulnerable people and new rules were put in place to regulate the lenders.
The company was forced to overhaul its approach to credit risk to ensure it was lending responsibly. This was a severe hit to shareholders.
In a statement, representatives for Wonga said: "A decision has been taken to place Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited into administration."
It added that administrators had been appointed.
"Wonga customers can continue to use Wonga services to manage their existing loans but the UK business will not be accepting any new loan applications," the statement said. "Customers can find further information on the website."
"Wonga's overseas businesses continue to trade and are not part of this announcement," it added.
