Deathwatch: Wonga

20 April 2015

Wonga Wonga has dropped into the red, which will make any disgruntled ex-customers of theirs - especially those who received threatening, fake legal letters - hoot in derision.

After a host of scandals, the company have been fined a number of times. New rules on payday loan companies are hammering the company, and advertising agencies have backed away from Wonga, as they don't agree with what they do.

Basically, Wonga are a toxic brand at the minute.

This week, they'll report that their revenues have slumped by a third to a little over £210m, with losses rocketing to £35m.

The fines paid out hit the company hard on top of the new rules across the industry, which meant that payday loan companies had to lower charges and cut back on potential customers. Wonga's losses will be announced this week, alongside a detailed explanation by top boss Andy Haste and his new chief executive of UK lending, Tara Kneafsey.

Wonga has also announced 325 job losses while it is in the process of trying to renew their licence with the Financial Conduct Authority (FCA). The whole thing threatens the very existence of the company. The add to their misery, Labour have said that they'll put an extra levy on lenders’ profits in order to subsidise local credit unions, which have lower interest rates. That's if they get in of course.

Analysts say that many payday lenders will be able to pull through all this, but Wonga is the one that will probably perish.

One worrying thing in all this, apart from job losses, is that customers who feel the need to get these short-term loans may have to go through shadier channels, such as loan sharks, to get a quick advance - and nothing good comes from those.

TOPICS:   High Street News   Debt   Loans

2 comments

  • Albi
    Funny that. In their world they simply lent to people and they paid it back with interest on top. Yet banks manage to do it and make a heap of money. It's almost as if their business model was dependent on racking up default charges.
  • Martin
    Which is your choice. I suppose if you need to feed little Johnny you can just borrow from the friendly local thug who will break your legs if you don't pay up as well as increasing your debt.

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