Wonga files for administration

In a statement, the company said: "A decision has been taken to place Wonga Group Limited, WDFC UK Limited, Wonga Worldwide Limited and WDFC Services Limited into administration.

“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. Chris Laverty, Daniel Smith and Andrew Charters of Grant Thornton UK are in the process of being appointed as joint administrators.

“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. Customers can find further information on the website. Wonga’s overseas businesses continue to trade and are not part of this announcement.”

It follows a surge in compensation claims against the lender, which caused it to seek £10m of emergency funds from its investors.

The claims relate to loans taken out prior to 2014, the company said, when controversy over its lending practices led to the introduction of a cap on the cost of borrowing.

Following the cap, in which the Financial Conduct Authority (FCA) introduced a cap of 0.8 percent of the amount borrowed per day on the cost of payday loans, Wonga was forced to change its business model, providing a greater range of lending products.