Massive Profits Drop For Newcastle United Sponsor Wonga
Those Newcastle fans who are less than happy with the club’s choice of shirt sponsors, won’t be too unhappy to hear that Wonga have seen a massive drop in profits.
The legal loan shark have seen profits fall by over half, with the year to the end of December 2013 showing a profit of £39.7m, a drop of 53% on the previous financial year.
The Financial Conduct Authority (FCA) ordered Wonga to pay £2.6m compensation to 45,000 customers, following fake letters from non-existent law firms going out to customers.
On top of this Wonga were also told to compensate 200,000 customers who they’d overcharged via a ‘technical’ issue. In total these issues cost Wonga £18.8m.
(These costs were included in the 2013 figures as some of the overcharging went as far back as 2008)
Moving forward, Wonga have admitted that they expect the company to be “smaller and less profitable’, which is at least in part due to long overdue new controls set by the regulator, the FCA.
Since July of this year, Wonga and their competitors have had to conform to new rules which force them to increase affordability checks as well as limit ‘roll overs’ of loans.
Since July 2014, all payday loan companies have had to conform to new rules, which limit roll-overs of loans and force them to increase affordability checks. From January 2015, they will also have their charges capped.
While Wonga advertising on TV has also come to an end due to the FCA’s changes to the rules.
From January of next year, Wonga and the rest will also have their charges capped.
While Wonga expect to make less money in Newcastle and the rest of the UK, by using similar brands they are looking to target people in other countries that have similar lax rules as was the case in the UK before these recent changes
With Wonga’s Chief Executive Tim Weller saying;
“Investment in people, processes and our international businesses were key factors in the decline in Wonga’s 2013 profits and we’ll continue to build a sustainable business.”
So just as Mike Ashley with Sports Direct and his many other brands that he is now looking to massively expand abroad with the help of all the free advertising at St.James’ Park.
So clearly, Wonga will also see the overseas broadcasting of Newcastle United via the Premier League’s TV reach, as a huge help in their development in other countries.
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