Do You Think Are Wonga Payday Loans In Trouble?
Are Wonga Payday Loans In Trouble you may ask?
After the way they have treated their customers in the past, it is possible that there are a few cheers going up from ex-Wonga customers, based on the latest financial news to come out.
Maybe the ex-customers could get together and give Wonga a short-term loan at very high interest!
Wonga is the largest payday lender of the UK, but found its losses double last year as tougher regulation in the industry continued to bite.
The short term lender saw pre-tax losses grow from £38.1m in 2014 to £80.2m in 2015.
It’s overhauled the way it evaluates applications for credit and extended the repayment term of their loans too.
Nonetheless, it indicated that 2016 would be a “turning point” in its fiscal performance.
The business, alongside other payday lenders, faces more demanding rules from the regulator, the Financial Conduct Authority (FCA), which has ruled that customers must go through more rigorous affordability checks.
The regulator’s main weapon is a cap on the cost of payday loans interest rate chargeable of 0.8% of the amount borrowed per day, which came into force in January 2015.
We will have to wait a while to see if their predictions are true that 2016 is their year for turning the business around again.
So, if the biggest UK payday lender is Wonga and they are in difficulties, what about the smaller payday loan lenders out there?
Time alone will tell to see how the payday loan market shakes out and settles down.
There is no doubt that people were being ripped off by some payday loan companies in the past and some regulation was indeed necessary in my opinion.
However, have the Financial Conduct Authority gone too far in their restrictions and they have stifled the payday loans market?
If they have and those payday loans are becoming less and less available to people, the danger is that they will turn to unregulated sources of cash, like Loan Sharks.
By the way, I am so glad Wonga have stopped using those silly OAP puppets in their adverts!
The BBC News website have further details on this story.