Lender Wonga axes hundreds of jobs

Published: Tuesday 24th February 2015 by The News Editor

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Wonga is set to cut 325 jobs under a “strategic refocus” of its consumer businesses, the firm has announced.

The payday lender has launched an immediate consultation with staff at risk of redundancy, which will run for 30 days.

Chairman Andy Haste said Wonga will become smaller and less profitable in the near term as it introduces changes to make sure it lends “fairly and responsibly”.

He said: “Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes. We’ve already made significant changes, including appointing a new leadership team, implementing a new risk decision engine and tightening our lending criteria.

“However, Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market. Regrettably, this means we’ve had to take tough but necessary decisions about the size of our workforce.

“We appreciate how difficult this period will be for all of our colleagues and we’ll support them throughout the consultation process.”

It is expected a phased reduction in jobs will mainly affect teams that support the UK business from London, Dublin, Cape Town and Tel Aviv, eventually leaving Wonga with a UK-related workforce of around 325 people.

The remaining roles are expected to be based in London and Cape Town, with plans to close the Tel Aviv office by mid-2015 and the Dublin office by mid-2016.

Wonga also announced that, following discussions over several months, it has agreed to sell Everline, its small business lending brand, to Orange Money Ltd, a small to medium sized enterprises-focused lending business trading as Ezbob.

Police recently ruled out a criminal investigation into Wonga over the scandal in which it chased customers with fake legal letters to pressure them into paying up.

City of London Police said that, after a ”thorough review”, it has concluded ”there was not sufficient evidence to progress a criminal investigation”.

Last June, Wonga agreed with the Financial Conduct Authority (FCA) to pay £2.6 million in compensation for the letters it sent to 45,000 consumers from non-existent law firms.

Wonga is Britain’s biggest payday lender, with more than one million active customers.

Wonga has recently tightened up its lending procedures as well as removing its adverts featuring elderly puppet characters from British TV screens.

The payday lending industry generally has been subject to a huge clampdown after coming under the FCA’s regulation last April.

Firms have only been granted interim permission to operate under the FCA’s toughened regime and they will have to apply for full permission to continue operating. Wonga is due to apply for full authorisation later in the year.

Payday lenders are now no longer allowed to roll over a loan more than twice and they can make only two unsuccessful attempts to claw money back out of a borrower’s account.

Last month, the rules across the industry were tightened further, with a cap being placed on the overall cost of a payday loan as part of moves to stop such debts spiralling out of control.

Published: Tuesday 24th February 2015 by The News Editor

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