Wonga’s Losses Set To Double To £ 70million In 2015 | Wonga

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Wonga’s losses are expected to nearly double after a drop in the payday lender’s income following price caps imposed by the city’s regulator.

The results, which are due to be announced on Wednesday, appear to raise questions about the success of the company’s attempts to reinvent itself in a stricter regulatory environment, as it attempts to ignore past controversies over its business practices.

Last year, Wonga was ordered to pay over £ 2.6million in compensation from the Financial Conduct Authority (FCA) for “Unfair and deceptive debt collection practices”, after sending threatening letters to clients of non-existent law firms.

In 2012, the Office of Fair Trading told him to clean up his deed after sending letters to clients accusing them of fraud.

On Tuesday, Sky News reported that Wonga would post a pre-tax loss of around £ 70million in 2015, up from £ 37million a year earlier. The results will also show a sharp drop in Wonga’s revenue from £ 215million in 2014, the channel said.

The company declined to comment.

The figures come after a year in which Wonga and other payday lenders have been forced to operate under stricter regulations.

Over the past year, interest and charges on all high-cost short-term loans were capped at a daily rate of 0.8% of the amount borrowed. Meanwhile, if borrowers fail to repay their loans on time, the default fee should not exceed £ 15, while the total cost, including fees and interest, is capped at 100% of the original sum.

According to the FCA, who introduced the rules, this means that no borrower will repay more than double the amount borrowed.

The move follows a series of criticisms leveled at the industry amid allegations of unscrupulous practices and customers racking up huge debts.

Wonga – who recruited Andy Haste, a former boss of the RSA insurance group, to improve his image in 2014 – said he wanted to move his business away from short-term credit that made him famous, but also made it the focus of public anger.

“Wonga has naturally come under criticism and we know we need to repair our reputation and regain our right to be an accepted part of the financial services industry,” Haste said when he accepted the £ 500,000 post. per year.

However, the scale of the turnaround Haste is facing is illustrated by the latest figures, which bring Wonga’s losses over the past two years to over £ 100million. In the previous two years the company made a profit of £ 39.7million in 2013 and £ 84.5million in 2012.

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