Wonga set to write off £220m in debts

October 3, 2014

By Lucy Palmer-Richeson

Payday lender Wonga say they will write off the debts of 330,000 customers following a discussion with City watchdog the Financial Conduct Authority (FCA).

The FCA said that the 330,000 customers who are over 30 days in arrears, and who would not have been allowed a loan under the new affordability guidelines, would no longer be required to repay their loans, a move which is set to cost Wonga approximately £220m.

A further 45,000 customers who are up to 29 days in arrears will be required to repay their debt, but all extra charges and interest will be dropped and they will be allowed an extra period of four months to make the repayment.

Wonga customers affected by this announcement will be informed by October 10th.

The FCA took over regulation of consumer credit in April of this year, and Wonga has already been in trouble for sending customers fake legal letters. Now the FCA has evidence that Wonga are not “lending affordably and responsibly”.

Clive Adamson, director of supervision at the FCA, said of the decision: “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.”

“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.”

Wonga’s chairman Andy Haste, who joined the company in July and has been in talks with the FCA about the lending practices of the company, said: “It’s clear to me that the need for change at Wonga is real and urgent.

“Our regulator is determined to improve standards in consumer credit and I share that determination.

“There is much to do in order to make Wonga a sustainable and accepted business, and today’s announcement is a significant step forward in that process,” he 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.”

He added: “I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions.”

Wonga already announced this week that there had been a 53% fall in annual profits. It said it expected to be “smaller and less profitable” in future, partly because of the new controls and regulations set by the FCA.