NUFC Sponsor Wonga Lose Out On £255m Due To Clampdown
Hot on the heels of Wonga’s profits dramatically tumbling, more bad news revealed today for the legal loan shark.
[intlink id=”48186″ type=”post”]Tuesday brought the revelation[/intlink] that Wonga’s profits had been badly hit, by having to pay out cash to customers they had overcharged and to customers sent fake letter s from non-existent legal firms.
This being partly down to new controls set by the regulator, the FCA, who had forced Wonga to increase affordability checks as well as limiting roll overs of loans, these measures coming into effect three months ago in July.
The full impact of just how hard this is going to hit Wonga has emerged today, with the company having to write off a total of £220m worth of debt belonging to 330,000 of their customers, after they admitted making loans to people that couldn’t afford to pay them.
On top of this, Wonga will also have to take on £35m in extra costs, these relating to another 45,000 customers who they can’t impose charges and fees on.
The net effect of this action means that around 330,000 customers who are over 30 days in arrears will owe nothing and have their balance entirely written off, while another 45,000 who are less than 30 days in arrears will not have to pay interest and charges and just have to repay the debt.
Andy Haste, Wonga’s new Chairman, accepted the need for change was ‘real and urgent’ and that the new changes mean that due to tighter lending criteria, far fewer loans will be issued.
The customers benefiting from these actions forced on Wonga, amount to roughly a fifth of the 1.8m customers to use the company in its 7 year history.
How this downturn in Wonga fortunes impacts on their relationship with Newcastle United remains to be seen.
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