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Payday lender Wonga says it is writing off £220m of debts for 330,000 customers after putting in place new affordability checks.
The company, which has faced criticism for its high interest rates and debt collection tactics, made the changes after discussions with regulators. Customers in arrears whose loans would not have been made under the new checks will have their debts written off. A further 45,000 customers in arrears will not have to pay interest on loans. Affected Wonga customers will be notified by 10 October. Wonga's chairman Andy Haste, who joined the company in July, said a review of lending practices had shown the need for change at Wonga was "real and urgent", and new stricter lending criteria would mean "accepting far fewer applications from new and existing customers".....Read more here
Previous news:Wonga: The pain starts here
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Some 45,000 customers in arrears on loans were sent letters from non-existent law firms and are to be given a share of £2.6m. But only 27,000 have been contacted so far, Wonga's chief credit officer Nick Brookes told the Treasury Committee. He said some customers' details had changed and were difficult to contact. An investigation by the Financial Conduct Authority (FCA) found that Wonga sent letters to customers from fake law firms called "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries". The plan was to make customers in arrears believe that their outstanding debt had been passed to a law firm, with legal action threatened if the debt was not paid. The company said that the tactic ended four years ago and, in June, promised to pay compensation. This requires customers to accept an offer of compensation made by letter from Wonga. So far, only 5,000 customers have responded, with 99% of them accepting the offer of compensation.....Read more here