Hundreds of thousands of people will be able to breathe easier today after payday lender Wonga agreed to write off more than £200 million in loans as part of an overhaul of its lending practices.
The firm has developed a reputation for intimidating customers into repaying its high-cost loans which they can scarcely afford.
But new chairman, Andy Haste, who has been in post since July, said the firm needed “urgent” change after a thirst for profit give rise to some questionable business practices.
Mr Haste announced that the firm would now operate with revised affordability checks, which would result in far fewer loans being issued.
In a measure designed to show the firm’s determination to change, he said that 330,000 existing customers who would not have met these criteria will now have their loans written off. 45,000 more customers will not face any interest charges on their loans.
The measures will cost the firm a total of £220 million.
“I agreed with the concerns expressed by the FCA [City regulator, the Financial Conduct Authority] and as a consequence of our discussions we have committed to taking these actions,” he said.
Still Worried About Your Debts?
The move follows a campaign by the Financial Ombudsman Service (FOS) to alert people to the support at hand if they run into difficulty with their debts.
The ‘What’s Keeping You Awake at Night’ video, with its rather striking Viking Ombudsman, highlights the services on offer.
How the Ombudsman can help:
- Help you agree affordable repayments on a loan.
- Help if you’re being harassed by debt collectors.
- Help if you’re being hounded for a loan that’s not yours.
- Put you in touch with charities that assist with debt management issues.
Find out more about the campaign here: http://www.financial-ombudsman.org.uk/keeps-you-awake/index.html