Wonga Writing Off Debts for 330,000 UK Customers
October 3, 2014
The payday lender Wonga has announced it is to write off debts for 330,000 of its customers around the UK as a result of changing its policies on affordability and in response to ongoing discussions with regulators.
The amounts being written off are reportedly worth around £220 million but the resulting losses to Wonga are estimated at £35 million.
Wonga is a key player in Britain’s payday loan market but has come in for heavy criticism over its lending policies and debt recovery tactics in recent years.
In a series of statements the company outlined and explained a shift in its approach to lending with particular attention being paid to the issue of affordability among borrowers.
“We have strengthened our lending criteria to ensure that we only lend to customers we believe can reasonably afford to repay their loans,” the company said.
Wonga says it will write off all outstanding debt for 330,000 customers who have payday loans in arrears for longer than 30 days from October 2nd 2014. Around 45,000 Wonga customers with arrears of 29 days as of that same date will be asked to repay their debts without interest or charges over an extended period of four months.
“On conducting a review into our previous lending criteria, we recognised that we may not have always made the right lending decisions, and on reflection some of these loans may not have been affordable,” the lender said.
Wonga says it will be communicating via email or letter with the customers affected by its recent decisions and its lending policy reviews before October 10th.
The company also made commitments to ensure it lends money less often to people who are clearly not in a position to pay those amounts back and who are likely to face serious debt problems as a result.
“We have been working closely with the FCA (Financial Conduct Authority) to agree additional requirements to our lending criteria, which have been implemented as of the 2nd October 2014 across our UK consumer loans service,” Wonga said.
Andrew Haste, Wonga’s newly appointed chairman, said: “We want to ensure we only lend to those who can reasonably afford the loan in question and during my review, it became clear to me that this has unfortunately not always been the case.
The FCA released its own statements on the issue and its discussions with Wonga, describing the steps being taken by the company as having been agreed under the terms of a “voluntary requirement”.
Clive Adamson, the FCA’s director of supervision, said: “We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations.
“This should put the rest of the industry on notice – they need to lend affordably and responsibly. It is absolutely right that Wonga’s new management team has acted quickly to put things right for their customers after these issues were raised by the FCA.”
The start of a new year is the perfect time to take stock of your finances and put plans in place for a financially savvy year ahead. While you may feel your problems are insurmountable, there are always things you can do to help, most of them surprisingly easy. Here are 7 ways you can […]
If you have credit card debt which is attracting a high level of interest, moving this balance onto a lower interest card could save you a considerable amount of money. This process is known as a ‘balance transfer’, and if done correctly, this process could save you money and also reduce the time it takes […]
Many thousands of young Brits are being actively encouraged towards taking on debt and spending borrowed money even before they reach their 18th birthdays. That’s according to the price comparison website comparethemarket.com, whose research suggests that roughly one in four 16 and 17 year olds in the UK have been offered credit cards or asked […]
If you’re in serious debt with no hope of repaying your unsecured creditors, you don’t have to wait for a creditor to take legal action against you. You may be able to take matters into your own hands and apply for sequestration (bankruptcy in Scotland). This also prevents your situation from worsening. There are two […]
If you’re looking to save some money it’s a good idea to make a detailed budget that lets you see where your cash is currently being spent, and offers an overall view of your finances. You’ll need to collect together your income and expenditure details, including annual costs such as insurance, car expenses, birthdays and […]
Scotland has a number of formal debt solutions that can help you deal with a difficult financial situation. It’s advisable to take action as soon as possible, however, to prevent your levels of debt escalating when interest and other charges are added. Obtaining professional advice is key in this respect. An approved money advisor or […]