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Whither Wonga? The sins of the past have proved fatal

The days of the payday lender appear to be over. Photo: PA

The board have decided Wonga is insolvent and are calling in the administrators.

The truth is that Wonga has been showing signs of distress for some time.

The company has had problems ever since 2015 when the Financial Conduct Authority capped the interest and fees it and other payday lenders were able to charge.

Five years ago Wonga was ascendant. The company had one million customers, was turning over £300 million and sponsoring Premier League football teams.

It was also quickly developing a reputation for exploiting vulnerable borrowers .

The FCA imposed stricter rules, customers and revenue shrivelled and losses began to mount.

Grant Thornton will begin the search for buyer tomorrow, it will have a job on their hands.

Wonga's big problem has been a surge in compensation claims. The majority have been brought by claims management companies on behalf of customers. Most of them have been upheld, all of them are costing Wonga money.

The disappointing news is that if you owe Wonga money, you'll have to pay it back.

And if Wonga owes you compensation, you're unlikely to get it.

The administrator will look to sell off the company's loan book - such as it is. There will be a long list of creditors, former customers will be towards the back of the queue.

Grant Thornton will have to move fast. Wonga stopped issuing new loans this morning, the average existing loan only one month long.

Wonga is closed for business and will steadily disappear as loans mature.

Wonga's great success was it realised that there were a large number of people in Britain who need short-term credit to bridge the gap to payday.

Its great failure was aggressively extending credit at eye-popping rates of interest, to people who couldn't afford to repay. The sins of the past have proved fatal.