Payday lender Wonga entered into administration late on Thursday, having earlier that day stopped accepting new loans in the wake of reports that it is on the brink of collapse.
Sky News reported on Sunday that the company had filed for administration with professional services firm Grant Thornton after receiving a slew of customer compensation claims amid a government crackdown on payday lenders.
In a statement on Thursday, Wonga said: "While it continues to assess its options Wonga has decided to stop taking loan applications. If you are an existing customer you can continue to use our services to manage your loan."
Wonga was ordered to pay £2.6mln to compensate 45,000 customers in 2014 when the Financial Conduct Authority accused the company of unfair debt collection practices. The rules on payday loans companies since then have tightened.
The government clampdown dented Wonga’s earnings as it was forced to overhaul its procedures to meet the new rules. In 2016, the company posted pre-tax losses of nearly £65mln.
Wonga has continued to face legacy complaints, leading the company to seek a bailout by its backers this month.
In a statement on its website, confirming Wonga had entered administration under Grant Thornton, finance industry watchdog, the Financial Conduct Authority, said it would continue to supervise the firm and seek fair treatment for customers.
But it added: “Customers should continue to make any outstanding payments in the normal way. All existing agreements remain in place and will not be affected by the proposed administration.”
Wonga's collapse leaves an estimated 200,000 customers still owing more than £400mln in short-term loans, with the administrators expected to sell Wonga’s loan book to another lending firm.