Wonga's new chief executive, Andy Haste, has been forced to write off millions by the FCA (the new City Regulator, Financial Conduct Authority). This was brought about by a ruling from the FCA this week that the company should not have lent money to people who could never afford to pay it back. Andy Haste accepted that his company should have been more vigilant with their credit checking procedures.
In all Wonga will have to write off £220m of loans to 330,000 borrowers. 45,000 more borrowers will also be affected if they have missed payments and will not therefore be asked to pay back interest owed. This may open the floodgates for many more customer paybacks from other payday lenders.
Following an introduction of tougher rules in January the FCA says that possibly 99% of payday lenders will cease to trade. Interest and fees charged will be limited to 0.8 per cent a day and a cap of 100 per cent will be applied. Customers will not be able to apply for a loan roll over more than twice.