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Re: Wonga to pay redress for unfair debt collection practices – FCA - £2.6m to 45k cu
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Wonga announces major customer forbearance programme and strengthens affordability checks to ensure sustainable lending
Wonga Group today announces significant changes to its UK consumer loans business, Wonga.com, including:
• A major customer forbearance programme
• A strengthening of the lending criteria for Wonga.com to address issues of affordability and repeat borrowing
• The move to a new lending decision engine to ensure Wonga lends sustainably and delivers appropriate outcomes for customers
The announcement follows discussions between Andy Haste, the new Group Chairman, and the Financial Conduct Authority (FCA).
The forbearance programme will address existing customers whose loans would not have been made had they been subject to the new affordability criteria introduced today. The programme is as follows:
• For approximately 330,000 customers who are in arrears of 30 days plus, as at 2 October 2014, Wonga has agreed to write off all outstanding debt
• Approximately 45,000 customers who are in arrears of up to 29 days, as at 2 October 2014, will be asked to repay their debt without interest and charges, and will be given an option of paying off their debt over an extended period of four months
Wonga will proactively contact all customers included in the forbearance programme by 10 October 2014.
The company will work with the FCA to identify if any further remedial action is required and will communicate details, if appropriate, in due course.
Mr Haste joined the company in July and promised a review of the customer base and the existing lending criteria, as two of six priorities* to ensure Wonga provides short-term lending to the right customers in a responsible, transparent and sustainable way.
Andy Haste said: “When I joined Wonga I was made aware of concerns the FCA had already expressed around affordable lending, concerns which I shared. I committed to ensuring our lending is conducted in a responsible and transparent manner, delivering the best outcomes for our customers. I also said this would lead to a tightening of Wonga’s lending criteria and we will now be accepting far fewer applications from new and existing customers.
“We want to ensure we only lend to those who can reasonably afford the loan in question and during my review, it became clear to me that this has unfortunately not always been the case. I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions.
“It’s clear to me that the need for change at Wonga is real and urgent. Our regulator is determined to improve standards in consumer credit and I share that determination. There is much to do in order to make Wonga a sustainable and accepted business, and today’s announcement is a significant step forward in that process.”
Wonga will now work with a third party, appointed in conjunction with the FCA and responsible for reviewing the implementation of the new lending decision engine to ensure it is delivering appropriate outcomes for customers.
The company said the implementation of new lending criteria meant it would be accepting significantly fewer loan applications and that it expected some existing customers would no longer be able to use the service.
From today, the company has improved the online information it provides on debt and money advice, both at the application stage and when someone is declined. Mr Haste has also written to the free, independent and impartial debt charities to explain the changes and the company’s new approach to lending.
Ah ha
Wonga announces major customer forbearance programme and strengthens affordability checks to ensure sustainable lending
Wonga Group today announces significant changes to its UK consumer loans business, Wonga.com, including:
• A major customer forbearance programme
• A strengthening of the lending criteria for Wonga.com to address issues of affordability and repeat borrowing
• The move to a new lending decision engine to ensure Wonga lends sustainably and delivers appropriate outcomes for customers
The announcement follows discussions between Andy Haste, the new Group Chairman, and the Financial Conduct Authority (FCA).
The forbearance programme will address existing customers whose loans would not have been made had they been subject to the new affordability criteria introduced today. The programme is as follows:
• For approximately 330,000 customers who are in arrears of 30 days plus, as at 2 October 2014, Wonga has agreed to write off all outstanding debt
• Approximately 45,000 customers who are in arrears of up to 29 days, as at 2 October 2014, will be asked to repay their debt without interest and charges, and will be given an option of paying off their debt over an extended period of four months
Wonga will proactively contact all customers included in the forbearance programme by 10 October 2014.
The company will work with the FCA to identify if any further remedial action is required and will communicate details, if appropriate, in due course.
Mr Haste joined the company in July and promised a review of the customer base and the existing lending criteria, as two of six priorities* to ensure Wonga provides short-term lending to the right customers in a responsible, transparent and sustainable way.
Andy Haste said: “When I joined Wonga I was made aware of concerns the FCA had already expressed around affordable lending, concerns which I shared. I committed to ensuring our lending is conducted in a responsible and transparent manner, delivering the best outcomes for our customers. I also said this would lead to a tightening of Wonga’s lending criteria and we will now be accepting far fewer applications from new and existing customers.
“We want to ensure we only lend to those who can reasonably afford the loan in question and during my review, it became clear to me that this has unfortunately not always been the case. I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions.
“It’s clear to me that the need for change at Wonga is real and urgent. Our regulator is determined to improve standards in consumer credit and I share that determination. There is much to do in order to make Wonga a sustainable and accepted business, and today’s announcement is a significant step forward in that process.”
Wonga will now work with a third party, appointed in conjunction with the FCA and responsible for reviewing the implementation of the new lending decision engine to ensure it is delivering appropriate outcomes for customers.
The company said the implementation of new lending criteria meant it would be accepting significantly fewer loan applications and that it expected some existing customers would no longer be able to use the service.
From today, the company has improved the online information it provides on debt and money advice, both at the application stage and when someone is declined. Mr Haste has also written to the free, independent and impartial debt charities to explain the changes and the company’s new approach to lending.
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