Belfast Telegraph

Under fire Wonga in the red again after fresh losses

By John-Paul Ford Rojas

Payday lender Wonga is expected to slump into the red when it publishes full-year results this week.

The controversial business will reportedly announce losses of around £35m, with revenues down by a third to about £210m.

It is a further slide in earnings for the lender after profits for 2013 halved to £39.7m as it racked up costs relating to a scandal over fake legal letters.

Wonga is shrinking its business as it tries to clean up its tarnished reputation in an industry whose practices have drawn criticism from politicians as well as the Archbishop of Canterbury.

Last June, Wonga was ordered to pay compensation of £2.6m by the Financial Conduct Authority after sending threatening legal letters from fake law firms to 45,000 customers.

In October, it said it had written off a total of £220m of debt belonging to 330,000 customers after admitting making loans to people who could not afford to repay them.

Chairman Andy Haste, appointed last summer, has promised to clean up the company and admitted it had made "serious mistakes".

He said the business, which has been strongly criticised by MPs over interest rates of more than 5,000%, must review rates, fees and charges and no longer be seen as targeting "the young and the vulnerable".

Earlier this year, Wonga announced plans to cut 325 jobs under a new strategy which will see it become smaller and less profitable, under changes to ensure that it lends "fairly and responsibly".

At the time of the announcement in February, Mr Haste said: "Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market."

This week's figures are not expected to include the cost of the job cuts.

The impact of a cap on payday loan charges in force since the start of this year is also not expected to be a factor in the 2014 figures.

Belfast Telegraph