A report by Sky News has suggested that payday lender Wonga is on the brink of collapse.
Following a surge in compensation claims against the firm, the short-term lender has called upon the accountancy firm Grant Thornton to handle the possible administration of the group.
The decision for Wonga to appointment administrators comes just weeks following the report revealing an emergency £10 million cash injection to keep it afloat.
A spokesman said at the time that the firm was facing “a marked increase in claims related to legacy loans, driven principally by claims management company activity”.
A Wonga spokesman said: “Wonga recently raised £10m from existing shareholders to address the significant increase in legacy loan complaints seen across the UK short-term credit industry.
“Since then, the number of complaints related to UK loans taken out before the current management team joined in 2014 has accelerated further, driven by claims management company activity.
“Against this claims backdrop, the Wonga board continues to assess all options regarding the future of the group and all of its entities.”
If the short-term lender is to fall into administration it will mark a huge difference from where they were stood five years ago, when the group one of the fastest-growing financial companies in the UK.
Executives from the group are understood to have been in talks with the Financial Conduct Authority in order to discuss the company’s options.
The FCA introduced a cap on the cost of credit in 2014. This was seen to be responsible for pushing smaller payday firms out of the market.
In 2014, the FCA ordered Wonga to pay £2.6 million to compensate the 45,000 customers.
According to Sky, the short-term lender is exploring the possibility of a pre-pack administration process that was similar to the one used recently by the House of Fraser.