Wonga’s brief foray into the world of peer-to-peer lending is at an end.
The infamous payday loans outfit first announced the launch of Invest and Borrow back in May 2014. The short term P2P funded portal priced loans at 75% APR, and returned an effectively guaranteed 7.23% AER to its lenders. In the event of a failure, Invest and Borrow set out to always return investors' initial principal stake alongside any interest that would have been accrued up to the month in which the default occurred.
But the platform, still less than a year old, now displays a notice of closure. Lenders will see their investments returned to them complete with any interest that has been earned up to now, and borrowers have been notified that all open loan agreements are now cancelled – with no obligation for further repayment! In light of this, taking out an Invest and Borrow loan in the last couple of weeks would have made for a shrewd investment...
It wasn’t so long ago that we theorized that Wonga might be looking to intensify its efforts within the peer-to-peer lending area, in the wake of then-acting Chief Executive Tim Weller’s comments about building a “sustainable business”. But Mr. Weller quit Wonga barely a month after issuing those comments. Andy Haste, who was brought in last July as Chairman in order to rebuild the company’s somewhat crumbling reputation, took over the day-to-day running of the business and Tara Kneafsey joined the company as its new UK Managing Director in December.
The closure comes as something of a surprise. One might imagine that a peer-to-peer lending facility would serve as a useful transitionary tool for a company in Wonga’s position. It could be that without sufficient traction, the portal simply became a distraction. We will of course keep our ears to the ground on this one.