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Payday lender Wonga has said it is no longer accepting new loan applications as it teeters on the brink of collapse. The company said in a statement on its website that it was continuing to “assess its options” and existing customers could still use their services to manage their loans.

It follows a surge in compensation claims against the firm amid a government clampdown on payday lenders. Reports say the firm has lined up Grant Thornton to act as administrators.

Wonga, the UK’s biggest payday lender, has faced criticism for its high-cost, short-term loans, seen as targeting the vulnerable.

The company’s statement said: ‘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.’

Wonga has previously said it will make a decision about its future within weeks.

In 2014, the Financial Conduct Authority found that Wonga’s debt collection practices were unfair and ordered it to pay £2.6m to compensate 45,000 customers.

Since then, payday loan companies have faced tougher rules and have their charges capped.

This has hit Wonga’s profits hard and in 2016 it posted pre-tax losses of nearly £65m, despite claiming its business had been “transformed”.

It has continued to face legacy complaints and was forced to seek a bailout from its backers this month amid a surge in claims.

It marks a huge fall from grace for Wonga, which in 2012 was touted to be exploring a US stock market flotation that would have valued it at more than $1bn (£770m).

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