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Wonga's 2014 Annus Horribilus: The Timeline(Sky News (UK) Via Acquire Media NewsEdge) Once the shining star in the consumer credit sector's payday loan firms, Wonga's reputation has been tarnished during 2014. Here are some of the key moments: 29 March Sky News City Editor Mark Kleinman revealed that chairman and founder Errol Damelin would quit. 1 April The Financial Conduct Authority (FCA) assumes oversight responsibility for the consumer credit market. The City regulator's role was prompted by the revelation that 60% of complaints to the now-defunct Office of Fair Trading were about how payday debts were collected. Previous analysis by the Competition Commission found payday firms issued around 10.2 million loans a year, worth £2.8bn. 9 April A television advertisement for payday loan firm Wonga is banned by the watchdog, the Advertising Standards Authority. More than 30 complaints were received about the advert, but Wonga denied it was misleading and downplayed the full-year annual percentage rate (APR) of 5,853%. 25 June The lender is ordered to pay £2.6m in compensation by the City watchdog after sending letters from non-existent law firms to customers in arrears. In some cases, fees for the letters were added to customers' accounts. Wonga apologised and said it had stopped the practice four years before. The FCA said 45,000 customers would be compensated for the action undertaken between October 2008 and November 2010. 11 July The Church of England investment portfolio fund pulls its money from Wonga. It had staked - indirectly - about £75,000 in the firm through an investment vehicle. The revelation embarrassed the Church. In 2013, Archbishop of Canterbury Justin Welby said he wanted to put Wonga out of business by helping credit unions to compete with it for the small loan industry. 14 July Andy Haste replaced incumbent Mr Damelin. Mr Haste said: "We need to repair the reputation." The company also ditches its TV adverts featuring string puppets to avoid, inadvertently, "appealing to the young and vulnerable." 15 July The FCA proposes new rules for all payday lenders, suggesting interest and fees be capped at no more than 0.8% of the amount borrowed, per day. It also wants interest and fees on a loan not to exceed 100% of the sum taken out. The final proposals are due to be announced in November, with enactment expected to start in January 2015. 30 September Wonga announced that its full-year 2013 profit fell by 53% to £39.7m. It said the scandal over fake legal letters, combined with compensation paid to 200,000 customers who were overcharged because of a technical problem, cost it £18.8m in a set aside provision. 2 October Wonga writes off the debts of 330,000 customers after admitting it had lent money to people who could not afford to pay back borrowings. The cost incurred per loan is an average of £667 and would cost £220m. It follows an agreement with the FCA over the issue. In addition, some 45,000 customers in arrears of up to 29 days will be asked to pay off their debt without interest. The FCA orders Wonga to make changes to its business immediately. Wonga's Mr Haste said the company needs "real and urgent" change to make Wonga an "accepted business". He added: "We want to ensure we only lend to those who can reasonably afford the loan in question." (c) Sky News 2014 |