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Wonga is on the brink of collapse after mass compensation claims from customers, it is claimed.

Thousands have demanded cash from the controversial payday loans firm over astronomical interest rates.

Wonga had charged up to 5,853% before being ordered to stop.

Labour’s Meg Hillier said: “There will not be many tears if Wonga goes.”

The firm, which lends to the needy, said it was “assessing all options”.

Wonga could call in administrators this week as it buckles under a flood of customer compensation claims, it was reported tonight.

Tens of thousands of people are seeking payouts after getting loans that dragged them further into debt.

The Financial Conduct Authority imposed a cap on payday lending charges in 2014 and ordered firms to make amends to borrowers charged sky-high rates on short-term loans.

But the Mirror revealed recently millions of pounds in payouts has yet to be claimed with lenders such as Wonga accused of dragging their heels on paying back customers.

An FCA investigation found between 2008 and 2010 Wonga sent threatening letters to customers in arrears from non-existent law firms.

At one point the firm was charging an annual percentage interest rate of up to 5,853%.

But it is on the brink of collapse, despite raising £10million from shareholders in a bid to stay afloat.

Labour’s Stella Creasy, who has led a campaign against payday lenders, said: “Wonga’s demise shows these businesses were built on exploiting cash-strapped Brits and why ­regulation was needed to protect them.” Vincent Vernon of Pay Day Refunds has said it is handling 32,000 customer claims, a quarter of them from Wonga.

He added: “There could be in excess of a million customers who have suffered from ­irresponsible lending and are owed money. Three of the poorest- responding lenders are Wonga, Curo and Quick Quid. They are continuing to ignore UK consumer rights. They’re fast to lend and extremely slow to repay.”

(Image: Newcastle Chronicle)

Labour MP Meg Hillier added: “There will not be many tears shed if Wonga goes.”

The FCA cap on interest rates sparked a decline in the fortunes of the once profitable business which employs 500 staff. In 2015 its losses more than doubled to £80.2million and it made a loss of £65million the following year.

Wonga is reported to have been in talks with the FCA to discuss the company’s options and could appoint Grant Thornton as administrators.

(Image: Newcastle Chronicle)

The lender said: “Wonga recently raised £10million from shareholders to address the ­significant increase in legacy loan complaints. The number of complaints related to loans taken out before the current management team joined in 2014 has accelerated.

“The Wonga Board continues to assess all options regarding the future of the Group and its entities.”

Wonga was founded in 2006 by South African businessman Errol Damelin. Its adverts feature “cuddly” puppets of elderly people. It once sponsored Newcastle United shirts.

Britain’s biggest payday lender, in 2012 it made four million loans to more than one million customers.

Good riddance, says friend of 'victim'

By Matthew Young

The best pal of a teenager who killed himself when Wonga emptied his bank account has welcomed news the payday loan firm is likely to go out of business.

Kane Sparham-Price, 18, was left penniless when the firm withdrew cash in 2013 under a lawful debt agreement. He took his own life that day. Speaking to the Mirror tonight, pal Stefan Williams, 23, said: “Thank God it’s looking like it will go bust.

(Image: ENTERPRISE NEWS AND PICTURES)

“It’s just a shame it’s affected so many people.

"My thoughts are with anyone whose family members or friends have committed suicide because of companies like this.”

There is no suggestion Wonga acted illegally.

But at the time South Manchester coroner John Pollard called for a change to payday loan rules to stop similar deaths.

The inquest also heard Kane, of Ashton-under-Lyne, suffered from mental health problems.

How you can claim

You can make a complaint if you were pushed into further debt by a payday lender when it should have known better.

To claim, find the addresses where you were living when you took the loans out, to help the firms find your account details.

Make a note of what you recall from when you took out the loans – how easy it was or if they offered more cash.

Explain your financial situation at the time, how the borrowing affected you, and whether you had loans with more than one firm.

A compensation firm can do it for you, for a small cut of your payout.

Find out more on how to make a complain for compensation here.