Profits Plunge For Payday Lender Wonga

Payday lender Wonga has announced its profits have fallen by more than half.

It said in the year to end of December 2013, its profits fell by 53%, to £39.7m. The firm put the loss down to "remediation costs". In other words, money it had to pay back to customers as a result of the firm's own errors.

In June 2014, the firm was ordered to pay £2.6m in compensation to 45,000 of its customers after it sent out fake letters from non-existent law companies. It was also ordered to compensate 200,000 customers who were overcharged due to a technical issue. The rulings cost the payday lender some £18.8m.

In addition, due to new controls imposed on the company by the Financial Conduct Authority (FCA), Wonga added that it expects to become "smaller and less profitable" in the future.

Wonga is just one of many payday loan companies that have had new rules placed on them by the FCA earlier this year. Among the rules is an increase in affordability checks, while from January 2015, charges will be capped. It has also not advertised on British television since July 2014.

Despite claiming it will make less profit in the UK, the firm is investing in similar brands elsewhere.

In a statement, Tim Weller, acting Chief Executive at Wonga, said: "Investment in people, processes and our international businesses were key factors in the decline in Wonga's 2013 profits, and we will continue to build a sustainable business."


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