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Payday lender Wonga reports £37.3m loss


Controversial payday lending company Wonga has reported a pre-tax loss of £37.3m for 2014.

The losses are in stark contrast to the year earlier, when pre-tax profits of £39.7m were reported by the company.

Wonga has been significantly less active in the market over the last 12 months, as lending volumes fell to £732m, from £1.1bn in 2013.

One of the major contributors to this fall in lending has been the implementation of tighter regulations by the Financial Conduct Authority (FCA).

All payday lenders now face more stringent regulations, which include being required to implement stricter affordability checks on customers who apply to take out a loan.

Additionally, lenders are not permitted to ‘roll over’ a loan more than twice, therefore limiting the amount a person can end up owing.

These regulations have resulted in Wonga having to take action to compensate customers who have been treated unfairly. This included paying a total of £2.6m in compensation to customers for distributing fake legal letters as a method of collecting unpaid debts.

Additionally, Wonga has also written off thousands of debts, totalling around £220m, as it was found that they did not implement the suitable procedures to check that consumers would be able to repay their debt.

Smaller and less profitable

Chairman Andy Haste has admitted that the changes within the sector have significantly affected the company, and will continue to do so in the short-term.
Mr Haste stated: "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.

"We know it will take time to repair our reputation and gain an accepted place in the financial services industry."

Wonga has already started to implement these plans to become a sustainable company, which have included cutting around 325 jobs and suggested that new products will be launched in 2015.

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