Analysis of Wonga Case Study 2022

Running head: ANALYSIS OF WONGA
ANALYSIS OF WONGA
Name of Student
Name of the University
Author Notes

ANALYSIS OF WONGA1
Executive summary
The purpose of the study is to analyses the condition of Wonga. Different ethical theories
such as Utilitarianism theory and Justice theory has been analyzed with ethical objections
such as Psychological Egotism and Legal-moralism. From the study, it has been found that
Wonga was unethically providing their customers with high interest loans, which resulted
into their collapse. It has been perceived that FCA protected the interest of the customers. It is
been also reported that Wonga has breached the data of their customers and violated the code
of conduct of their customers.

ANALYSIS OF WONGA2
Table of Contents
Introduction................................................................................................................................3
Ethics of the process...................................................................................................................4
Ethics applied to outcome..........................................................................................................5
Regulations.................................................................................................................................6
Factors........................................................................................................................................6
External view.............................................................................................................................7
Recommendation........................................................................................................................8
Conclusion..................................................................................................................................9
References................................................................................................................................10

ANALYSIS OF WONGA3
Introduction
Wonga was founded in 2006 by Errol Damelin and Jonathan Hurwitz and launched
their short term loan products. Wonga provides online loan services to the business. Payday
lender Wonga collapsed under the claims for rebates and compensation from its borrowers
(Brookes and Harvey 2017). Wonga collapsed on august 2018 with 200000 customers still
owing more than £400 million in short term loans. In 2014, FCA crackdown prompted Haste
to write off £220 million in debts and interest to 330000 customers (Hembruff and
Soederberg 2019). Just after things started in favour of Wonga, it emerged in august that the
payday lenders had to rescue it with £10 million capital injection. The debt crisis of Wonga
relates to the British debt crisis, which impacted the economy of the UK massively. This
happened as customers were asking for compensation claims from Wonga. The cap on
interest rates ruined the business model of Wonga, resulting in the collapse. Wonga was
targeting vulnerable borrowers with small loans which quickly got out of control and the
collapse happened. The fraud happened in the United Kingdom In the year 2018. After the
scam, the administration of Wonga decided to shut down their business from August 31 2018.
Internal stakeholders were involved in the scandal such as executives, chairman and
employees. The existing CEO left the company in 2013 as their financial condition was going
against them. Financial Conduct Authority stated that before shutting down, Wonga must pay
off their borrowers. The stakeholders requested their customers to continue to use their
services; however, it will not accept any new loan applications. FCA stated that Wonga has
several problems in their finance from the very beginning; however, they continued with the
problems, and the scandal happened. Andy Haste, the former CEO, said that they would
overcome this situation and make Wonga profitable again. The new cases of Wonga were
risking from 2014 and reached 4500 at the end of 2017 (Becker and Allayannis 2019).