About 330,000 lucky debtors are receiving a boost of £667 ($1076) on average because Wonga, the UK’s biggest payday lender, agreed to write off the debts of its costumers on more than 30 days of arrears as of Oct. 2nd.
The total debt amounts at £220 million ($355 million).
The move comes after the Financial Conduct Authority ruled that “Wonga was not taking adequate steps to assess customers’ ability to meet repayments in a sustainable manner,” and decided to grant the debtors with a freebie.
Roughly 45,000 more debtors, in arrears of 29 days or less, will only have to pay the initial debt without interest or charges, and will have four more extra months to repay their debts.
The FCA first looked into the lender’s books in April this year, and in June its CEO and founder/chairman both left the company just before police decided not to pursue a criminal investigation.
Wonga, who is famous for sponsoring British Premier League team Newcastle United, is extremely big in the UK. Wonga was not available for a comment when we contacted them.
Other lenders could follow suit as Clive Adamson, FCA director of supervision, said: “We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations. This should put the rest of the industry on notice — they need to lend affordably and responsibly.”
The £220 million includes interests and charges for late debtors, and the whole move is expected to cost Wonga only £35 million ($56.5 million) in principal cash, the initial amount loaned.
Wonga’s pre-tax revenues dropped by 35% in the last year, Sky News reported.