Executive chairman Andy Haste said:
“We said Wonga would be smaller and less profitable in the near term as we focus on creating a sustainable business that lends responsibly and transparently to customers who can afford to borrow from us.
“Today’s results are clear evidence of the changes we have made and are continuing to make. We know it will take time to repair our reputation and gain an accepted place in the financial services industry, but we’re determined to deliver on our plans and serve our customers in the right way.”
Wonga made major changes to affordability criteria following discussions with the FCA last October, after being criticised for not adequately assessing customers’ ability to meet repayments in a sustainable manner. It was also ordered to write off approximately 330,000 loans.
New rules in January also capped the amount that high-cost short-term credit lenders can charge. Customers taking out a loan cannot pay back more than twice what they borrowed, or more than £24 per £100 borrowed. Fixed default fees have also been capped at £15.
In February, the firm escaped prosecution over 'unfair and misleading' debt collection practices.
Kristjan Novitski, CEO and founder of short term loan company, Peachy.co.uk, said:
“These findings are indicative of a terrible year for Wonga. However, it does not mark the start of the end of the short term loan industry as companies are constantly evolving and offering new and innovative products far beyond the typical payday loan that will one day have its day. Today the short term loan market is so heavily regulated that it is only the most trustworthy, compliant and reliable companies that will survive – which is good news for consumers, the industry and the economy."
