Wonga to write off customer loans

Payday lender Wonga has said it would write off the debts of 330,000 customers whose loans would not have been approved under new affordability guidelines according to news released today.

The Financial Conduct Authority (FCA) said the 330,000 customers who are currently in excess of 30 days in arrears will have the balance of their loan written off and therefore owe Wonga nothing.

Harvey Bowes has learned the cost of writing off the debt will be £35m.

There is £220m debt outstanding for the customers affected, at an average loan value of £667.

Wonga said it would contact the borrowers by the 10th October 2014.

And some 45,000 customers who are between zero and 29 days in arrears will be asked to repay their debt without interest and charges and will be given an option of paying off their debt over an extended period of four months.

The news comes just days after the company reported a massive drop in earnings.

Wonga’s annual profit has dropped by 53%, after the payday lender came under fire for the tactics it uses to reclaim money from borrowers in default.

It said full-year pre-tax profit in the 12 months to 31 December were £39.7m, down from £84.5m a year earlier.

The company came under fire over its previous tactic of sending customers bogus legal letters.

With the increase of negative media attention and the real cost of Wonga’s activities, one would hope they will either move towards an ethical and fair approach to consumers or cease to trade altogether.

THIS ARTICLE IS DELIVERED AS INDUSTRY NEWS AND DOES NOT PROVIDE ANY FINANCIAL, BORROWING OR MORTGAGE ADVICE.

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About harveybowes
Mortgage Broker and founding Director of Harvey Bowes Limited. A mortgage broking practice with bases in Cardiff & Poole, UK. We take a fresh and positive approach to mortgage broking which pays dividends for both our clients and frankly, ourselves. The team at Harvey Bowes are expert advisors in all aspects of mortgages from residential to commercial and buy to let.

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