Wonga
The business, the turning points, and the decisions behind them.
01 / WHAT IT BUILT
What the company did
Wonga.com was a British payday loan firm founded in 2006, offering short-term, high-cost loans online via fully automated risk-processing technology - first loans in 2007, operating across the UK, Spain, Poland and South Africa. It became Britain's biggest payday lender with over a million customers, charging rates equivalent to an APR of 1,509% (a 100 pound loan over seventeen days cost 113.60 pounds to repay).
02 / Wonga FAILURE REASONS
Failure reasons
Wonga drew heavy criticism for predatory lending, with politicians including Ed Miliband calling it out and the Financial Conduct Authority finding it had lent to people who could never repay - Wonga agreed to compensate 45,000 customers for unfair debt collection practices. Regulatory caps on interest rates and fees slashed its revenue model, while losses mounted from a 2017 data breach and a surge of compensation claims for mis-sold loans. Despite a 10 million pound emergency cash injection from shareholders weeks earlier, Wonga fell into administration on August 30, 2018; Grant Thornton was appointed to wind down the business, sell assets and identify creditors, with Wonga owing unsecured creditors 83.3 million pounds.
03 / EVENT HISTORY
Events in the structured record
- Founded
Wonga is founded in the UK, launching fully automated online payday lending; first loans processed in 2007.
- Regulatory reckoning
FCA finds Wonga lent to people who could never repay; it agrees to compensate 45,000 customers for unfair debt collection practices, and rate caps are imposed.
- Data breach
Wonga suffers a data breach in 2017, adding to its losses as compensation claims surge.
- Administration
On August 30, 2018, Wonga falls into administration with Grant Thornton appointed to wind down the business; it owed unsecured creditors 83.3 million pounds.
04 / CONTEMPORARY REBUILD ASSESSMENT
Difficulty of rebuilding this project today
Material for this section is being gathered and checked. It will appear here once ready.
Overall assessment: Not completed
05 / CAUSAL CHAIN
How the factors connect
- 01
In 2006, Wonga was founded in the UK, building fully automated online payday lending and becoming Britain's biggest payday lender.
- 02
Regulatory caps on rates and fees, FCA findings of unfair lending, and compensation to 45,000 customers destroyed its revenue model.
- 03
A 2017 data breach and a surge in compensation claims for mis-sold loans deepened its losses.
- 04
On August 30, 2018, despite a 10 million pound emergency cash injection, Wonga fell into administration; Grant Thornton wound down the business, with 83.3 million pounds owed to unsecured creditors.