Payday Loan lender Wonga report £37.3m loss
Controversial short term lender Wonga have reported a £37.3m loss for 2014. The payday loan company that have been under the watchful eye of the Financial Conduct Authority have been forced into rethinking their lending policies after an investigation identified that their approval procedures and their debt recovery methods where unfair to customers.
In short it was found that they were lending to vulnerable customers (that otherwise would not be approved for loans) and misleading them with threatening tactics when it came to repaying their debt, which caused great stress and worry for these customers and plummeted them into seeking debt help for debt problems.
Following an apology to customers last year, they paid out compensation to 45,000 customers and wrote off thousands of loans approved to those that were unsuitable to repay, in terms of their income and credit rating. This amounted to around £220m loans written off for over 30,000 customers, customers that if assessed properly would have never been approved in the first instance.
Being forced to rethink their lending procedures and assessments and not carelessly approving the majority that apply for payday loans has obviously been a major factor in their profit loss. They also reported recently that they were cutting their entire staff in Ireland and Israel another method to reduce outgoing company spend.
Wonga have admitted their problems have affected their profits and their reputation as a lender and have forecast another loss for 2015.