Tuesday 27th September 2016                 Change text size:

Wonga profits halved by compensation payouts



calculator

The payday lender Wonga has seen its profits fall by more than half after a year marred by controversy.

Blue & Green Tomorrow is currently running a crowdfunder to ensure its survival. Please pledge.

Wonga, the UK’s largest payday lender, reported pre-tax profits for the year ending in December 2013 of £39.7 million. In 2012, the company raked in £84.5 million – a fall of 53%. 

Largely responsible for this, is the £18.8 million that Wonga was forced to pay in “remediation costs”, after it was revealed the firm sent fraudulent legal letters to customers.

The letters, sent between 2008 and 2010, threatened legal action over unpaid debts, but were sent by Wonga under the guise of fictitious law firms.

Wonga, like other payday lenders, has also been heavily criticised for its high interest rates, which critics say are exploitative.

The Competition and Markets Authority recently raised concerns that customers are paying £5 to £10 over the odds per loan because of a lack of competition.

As of October last year there were at least 90 payday lenders operating in the UK, but the three largest lenders – including Wonga – accounted for about 70% of total revenue. 

Recently released figures have also revealed that the number of complaints made against payday lenders has more than doubled over the past two years.

As a cheaper and more ethical alternative to payday lenders, many commentators have recommended that consumers turn to credit unions.

Reporting its results, Wonga said it would be “smaller and less profitable in the near term”, but revealed it was pushing ahead with plans to expand its international business.

Further reading:

Savers should be allowed to access pensions and avoid payday loans, say experts

Wonga faces charges of £2.6m for impersonating law firms

Payday loans to be capped at 0.8% to cut cost of borrowing

UKSIF praises Church of England for move away from Wonga

Payday loan complaints double in two years


There are currently no comments.

Register with Blue and Green

To leave a comment on this article, fill in your details below to register, alternatively if you are already registered you can login here







Subscribe for our Newsletter

Time limit is exhausted. Please reload CAPTCHA.

A password will be e-mailed to you.