Wonga has stopped accepting applications for loans as it seeks a rescue plan to stop the company from collapsing into administration.
The payday lender has added a notice to its website which states: “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.”
The controversial firm has been on the brink of collapse for weeks now, after a surge in compensation claims, and is trying to find investment to keep itself afloat.
Potential administrators have been lined up to step in if it fails to find a rescue deal.
The company said its struggles were due to a “significant” increase industry-wide in people making claims in relation to historic loans.
The lender blamed claims management companies for the rise, but said it was making progress against a transformation plan set out for the business.
Wonga has long faced criticism for the high interest rates it applies to loans.
At the moment, loans are still advertised on the group’s website, with a rate of 0.8 per cent per day - the maximum it can charge after the Financial Conduct Authority introduced a cap on payday loan costs in 2014.
The company has reportedly been in talks with the watchdog about the potential appointment of administrators. The FCA is concerned about the impact the closure of Wonga could have on customers who use its short-term loans, according to the Times.
A spokesperson for the regulator said any discussions the FCA engages in are confidential.
