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375,000 People to have Debts Written

off by Payday Lender Wonga The FCA have recently been investigating the business practices of Wonga, the pay-day loan company.

Wonga have been coined ‘legalised loan sharks’ by some and has been known to charge up to 5853%

annual interest charges on some loans. Some customers are in thousands of pound of debt and have

found to be paying back loans over a year later than they were originally taken out.

333,000 people who are more than 30 days in arrears for debts will have the whole loan written off. A

further 45,000 people who are less than 30 days in arrears, will be able to pay back the loan without

interest. Anyone entitled to this, will be contacted within the next weeks. Wonga has also announced

intentions to contact the credit referencing agencies to remove any missed Wonga payments from some

customer’s credit files.

“We are taking action to address the failing of the past. This business had been too focused on growth

and cared more about the loan outcome than the customer outcome. We are clearly very sorry for

what’s happened to our customers and are doing everything to put that right,” said Andy Haste, recently

employed as chief executive of Wonga.

The application process has been criticized as easily forged. Minimal checks are performed on an

applicant to check if they are financially capable of paying back the loan within the allotted time. A large

percentage of financially vulnerable people were found to have applied for the loans such as those that

are on benefits for unemployment or disability. The FCA strongly believes there are many people who

should not have been approved a loan in the first place.

2 © www.staysafemagazine.co.uk Scam Alerts 2014 StaySafe Magazine Scam Alert Service

Those who are in arrears with payments are said to receive daily telephone calls demanding money.

Previously, back in June it was discovered that Wonga was sending out phony law firm letters, following

this it was forced to compensate customers with over £2 million on the grounds of using scare tactics.

More detailed checks will be carried out during the application process to ensure that the customer’s

financial situation is appropriate. Wonga will also prevent those who are either currently in arrears with

an existing loan or have been denied within the last month. The write-offs will allegedly cost Wonga in

the region of £35 million, the company usually generates around £7 million in profit each year. It realizes

that the new strategies adopted will significantly reduce annual profits.

MP John Mann of the Labour party said, “I welcome today’s latest step to crack down on irresponsible

payday lenders … this is a company that has taken advantage of people in dire financial circumstances.”

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