LONDON (Reuters) – The collapse of Britain’s biggest payday loan provider Wonga will probably turn up the temperature on its competitors amid a rise in grievances by clients and phone phone calls by some politicians for tighter legislation. Britain’s poster child of short-term, high-interest loans collapsed into administration on Thursday, just weeks after increasing 10 million pounds ($13 million) to aid it handle a rise in payment claims.
Wonga stated the surge in claims ended up being driven by alleged claims administration organizations, companies which help consumers winnings settlement from organizations. Wonga had been already struggling following a introduction by regulators in 2015 of a limit from the interest it among others on the market could charge on loans.
Allegiant Finance Services, a claims management business centered on payday lending, has seen a rise in business in past times two months as a result of news reports about Wonga’s woes that are financial its handling manager, Jemma Marshall, told Reuters.
Wonga claims constitute around 20 % of Allegiant’s business today, she stated, incorporating she expects the industry’s attention to turn to its competitors after Wonga’s demise.
One of the greatest boons when it comes to claims administration industry happens to be payment that is mis-sold insurance coverage (PPI) – Britain’s costliest banking scandal which have seen British loan providers shell out huge amounts of pounds in payment.