Wonga jump into lower cost loans before being pushed

8 December 2014

According to reports, Wonga have started trials of lower-cost loans, a matter of weeks before the FCA start shoving them around (and everyone else as the regulator cracks down on the sector).

Britain's biggest payday loan lenders have started to randomly pick out people and offering them loands that have noticeably better terms than other payday loans companies. By the time the Financial Conduct Authority's new rules take effect in the New Year, Wonga will be able to brag: 'Oh that? We were doing all that anyway. We don't need telling because we're nice. Honestly we are.'

Of course, there's a lot of people who couldn't care whether Wonga are nice or not and look at them like any other financial institution and you're a mug if you get involved with them and deserve everything that comes with it. Hardly an empathetic approach, but then, Britain isn't an empathetic place really.

Anyway, the FCA rules say that payday loans will have to cap their interest at 0.8% per day, which means that, if you're borrowing £100, the customer will only accrue a maximum level of interest of 80p per day. Fixed default fees will be restricted to £15 and there'll be a cost cap of 100% of the initial loan.

Of course, Wonga deserve scrutiny as they've been sending customers letters from fake legal firms and have had a number of commercials banned and had to write off £220m in loans after the FCA spanked them on the way they do things.

It seems to be the way payday loans are going. Last week, we told you about Mr Lender - a dismal name for a company -  who are aiming to become the trustworthy, cheerful face of finance.

The FCA will be reviewing the new measures in 2017 to see if they're working and protecting the customers. Full marks if you muttered "we'll see" under your breath throughout this whole article.

TOPICS:   Banking   Debt   Loans


  • Alexis
    I like the lie they peddle about wanting to be paid back and it being commercial suicide to build a business model around not being paid back. Yet they go after people with poor credit that can't get money through the usual channels. If nobody else will lend them the money, what is so different about Wonga's model that enables them to do so? They depend on a certain percentage of people not paying back on time and being hit with fees.
  • Martin
    There is being paid back and being paid back. Yes people will be hit by fees (not to mention the actual interest rate) but they also don't want to be lending money to people who will never ever pay any money back, Go into bankruptcy, have to ask for one of those £1 a month for 20 years deals you can get when you are in dire trouble and trying to work out deals sort of thing. They have always turned the worst people now, and will continue to do so. It's just that now the amounts in fees will be lower, but the numbers borrowing will probably go up, tempted by the FCA regulated 'low' fees.

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