Viewing 40 posts - 1 through 40 (of 42 total)
  • Wonga made to write off debts!
  • footflaps
    Full Member

    Chickens finally come home to roost:

    Wonga writes off debts for 330,000 customers
    Chief executive apologises to customers as payday lender writes off £220m of debts and interest costs

    The action has come about because Wonga was granting loans to borrowers without checking that they could afford to make the repayments. The company boasts on its website that it will pay the money into customers accounts within five minutes of the loan being approved.

    It is understood that the checks the lender was making were so poor that many of its borrowers had no chance of ever repaying the loan because of the dire financial situation they were already in.

    The FCA and Wonga are continuing to look at whether any other customers might be affected. It is understood that this could include former Wonga customers who managed to pay off their loans but should never have been lent to in the first place. If these customers were identified, it could lead to another huge bill for the company.

    http://www.theguardian.com/money/2014/oct/02/wonga-writes-off-customer-debt

    nemesis
    Free Member

    Not to mention that they were so badly run that they actually UNDER charged many of their customers… (some were overcharged but far more undercharged). Gaw’d bless em, practically a charity 🙂

    jambalaya
    Free Member

    Indeed. They have been found to be making irresponsible loans.

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    Rockape63
    Free Member

    ‘kin ell….£220m written off!

    The pubs will be busier tonight! (in certain areas!)

    ninfan
    Free Member

    Damn, wish I’d taken out a loan now 😉

    Expect to receive an ‘are you owed interest on a loan you should never have been given’ text message in 3, 2, 1…

    jambalaya
    Free Member

    Not to mention that they were so badly run that they actually UNDER charged many of their customers… (some were overcharged but far more undercharged). Gaw’d bless em, practically a charity


    @nemesis
    , the fact is Wonga don’t have the staff or rescources to actually run the business successfully. There is rightly criticism of the level of charges but the fact is these small loans are impossible to manage profitably. There is a reason the traditional lenders have minimum borrowing amounts as otherwise you cannot make enough revenue to actually process and monitor the loans.

    theotherjonv
    Full Member

    while i can’t bring myself to like Wonga and their type, and clearly it’s their issue if they haven’t done proper risk checking, there was one woman on the BBC website who’d basically admitted that she lied about her income on the form, they didn’t get it checked properly, now she can’t afford to repay it and is blaming them as they shouldn’t have loaned in the first place. And I assume the loan will now be written off?

    i mean…..

    marcus7
    Free Member

    I saw some of their staff on the adverts muppets the lot of em… reckon they have a couple of months and they will go bang.

    fasthaggis
    Full Member

    I borrow from Psychic loan.com .
    They post out the money before I know I will need it.
    The money that just arrived is because you will be sending me your details and they gave me a reward in advance.

    hora
    Free Member

    I’ve got a question here- those customers are 100% off scot-free and none of the debts have been sold on?

    Wonga were made to- they’ve just realised they aren’t viable??

    tomhoward
    Full Member

    Is it me or is it that the amount written off per customer, £666(.66.), is somewhat chucklesome?

    😆

    ninfan
    Free Member

    they’ve just realised they aren’t viable??

    Hmm, I wonder if thats true? Given the ridiculous interest rates, even if you had to write off half the loans you would probably still be a profitable business – writing off a high proportion of loans has to be part of the built in business risk in ‘sub prime’ lending surely?

    mudshark
    Free Member

    Absolutely – though I suppose admin costs will be relatively high if the loans are paid off quickly. Some will have paid back more than enough to cover the costs of their loan even if now the debt is cleared.

    flange
    Free Member

    Wonga is nothing in comparison to the credit card companies…

    Addtionally £220m is nothing in comparison to what it could have been. A drop in the ocean. They won’t be going bust…

    jonba
    Free Member

    Wonga was granting loans to borrowers without checking that they could afford to make the repayments

    I wonder if the borrowers checked if they could make the repayments.

    njee20
    Free Member

    I saw some of their staff on the adverts muppets the lot of em… reckon they have a couple of months and they will go bang.

    No chance, they’ve got a new Chief Exec and a new UK MD, there’ll be changes, but they’re not going anywhere!

    thisisnotaspoon
    Free Member

    I’ve got a question here- those customers are 100% off scot-free and none of the debts have been sold on?

    I doubt many of the borrowers didn’t pay back the loan, I bet it’s mostly the 5000% intrest. So Wonga won’t have lost money.

    plyphon
    Free Member

    It would be like me buying a coke bottle cap for 10p, then placing it on ebay for £1000. The bottle cap gets stolen in the mean time – have I really lost £1000? Naw.

    taxi25
    Free Member

    I doubt many of the borrowers didn’t pay back the loan, I bet it’s mostly the 5000% intrest. So Wonga won’t have lost money.

    This is exactly what the £222,000,000 will be. Wonga won’t be sustaining any actual loss just some fairytail figure from their books.

    spooky_b329
    Full Member

    As above, new chief exec wants to change perception of the company which is the reason all the Wonga ads suddenly got pulled from TV. The pay back could almost be seen as an attempt at giving the company a more responsible/fairer image. (Assuming they made the refunds ‘voluntarily’ before being forced to)

    lunge
    Full Member

    APR’s are not a great way to measure short term loans like these. Someone once described it as lending your mate £50 the week before pay day and him paying you back the next week and buying you a pint to say thanks. That would have similar interest levels.

    Being devils advocate here, there always seems to be a lot of emphasis on the big, bad companies here and very little on the people who borrow more than they can afford to pay back.

    tomd
    Free Member

    if anything it shows what profiteering barstewards they were if they can afford to hand back hundreds of millions of pounds, undercharge people and write off loans without going bust.

    jambalaya
    Free Member

    while i can’t bring myself to like Wonga and their type, and clearly it’s their issue if they haven’t done proper risk checking, there was one woman on the BBC website who’d basically admitted that she lied about her income on the form, they didn’t get it checked properly, now she can’t afford to repay it and is blaming them as they shouldn’t have loaned in the first place. And I assume the loan will now be written off?

    i mean…..

    @theotherjonv
    – there in a nutshell is the US sub-prime mortgage crises, exactly the same was going on in the UK with self-certified mortgages. They let the mortgage brokers know on the QT that they basically never checked any income statements. Law makers could solve this in one simple step. Income must be verified, the figure you put in the income box must be proved whether its a Wonga loan or a mortgage application.

    jambalaya
    Free Member

    @lunge, that’s a great comparison.

    njee20
    Free Member

    if anything it shows what profiteering barstewards they were if they can afford to hand back hundreds of millions of pounds, undercharge people and write off loans without going bust.

    As said though, they’ve not “handed back” anything, they’ve just not got it in the first place, but as it was a notional amount it makes no difference. Their loss (potentially) is whatever they loaned against the £220m interest payments, so probably about £3.60.

    See this example:

    It would be like me buying a coke bottle cap for 10p, then placing it on ebay for £1000. The bottle cap gets stolen in the mean time – have I really lost £1000? Naw.

    ScottChegg
    Free Member

    Law makers could solve this in one simple step

    They could. To go to a ‘payday’ lender is to effectively remove yourself from the mainstream banking/lending/paying back mechanism that most people deal with.

    So, if you are in a situation where you feel this is the best bet for you, you are clearly not in the best state of mind to think what you are doing nor the best position to pay it back.

    So anyone who goes to Wonga for cash, should never get it.

    Is that an oversimplification?

    ninfan
    Free Member

    They could. To go to a ‘payday’ lender is to effectively remove yourself from the mainstream banking/lending/paying back mechanism that most people deal with…

    …Is that an oversimplification?

    Yes, because all too often these people are already well removed from the mainstream banking/lending/payback system – they simply couldn’t get a loan off the bank, because of the high risk of them not paying it back (and when the social did crisis loans, they defaulted on them too, so were left with their money being docked at source and left with not enough to live on)

    so the alternatives to wonga are unfortunately often theft, pawn, pimps or loan sharks

    and they sure as hell don’t write off loans as unrecoverable

    ourmaninthenorth
    Full Member

    So, if you are in a situation where you feel this is the best bet for you, you are clearly not in the best state of mind to think what you are doing nor the best position to pay it back.

    Read up Eldar Shafir on his principle of scarcity and the effect it has on decision-making.

    He cites payday loans as a part of this decsion-making impairment, with figures in the USA suggesting around 70% of a payday loan is used to pay off the previous one….

    hora
    Free Member

    Njee20 described well and simply.

    flange
    Free Member

    I’ll say it again, you think wonga are bad, have a look at the credit card companies. And not just the smaller products designed for those with poor credit history but the big names – high street banks and such like.

    Wonga are (partially) upfront about what they do, and people for the most part are borrowing out of necessity. They’re in a situation where they need money to get through to the end of the month. The average value of a new loan via a payday lender is £250 – that’s not a loan taken out to buy high value goods or consolidation of existing finance, that’s to get the applicant through to the end of the month. But for the most part wonga are transparent – you’re borrowing a small amount over a short period and as mentioned above the fees alone mean % wise (apr) it looks crazy high.

    As mentioned in the (very good) post above, the moodiness comes in when you look at their target customers. The majority of wonga advertising is done during a weekday, and is predominantly via itv northwest. So potentially those that can least afford it – not a generalisation but fact, that’s backed up by census data. Throw in ‘funny’ cuddley adverts and they seem an ideal alternative to big Dave down the pub.

    Credit card companies are a whole different set of players. Look at your terms on your credit card agreement. Most don’t and therefore are unaware that should you miss a payment, you forfeit your 0% balance transfer benefit and the value you transferred to it will now be charged at some mental rate. Again, this isn’t just the smaller companies, it’s the large banks. That’s just one example which on paper doesn’t sound horrific – just don’t miss a payment – but if you’ve missed a payment it’s probably for a reason, the last thing you then need is your minimum monthly payment skyrocketing to 10x what it was and remaining so going forward.

    Finance (IMO) is a complete scam. All of it. Some people need it, some people are good at ‘playing it’ and benefitting from it but for the most part these are businesses set up to make a profit and to do that they’re targeting people who can’t afford it. Combined with a society where having the latest and greatest is more important that , say, paying for the weekly shop and you have a disaster on your hands.

    ScottChegg
    Free Member

    Most don’t and therefore are unaware that should you miss a payment, you forfeit your 0% balance transfer benefit

    Surely everybody in the world is aware of that?

    If not then they qualify for the ‘Wonga’ test above. They can hold a pen but are somehow not responsible enough to know what they are doing?

    If people have access to these things; they should at least know what they are doing. Like a driving test for cash.

    At what point do they stop being victims of greedy banks and become hopeless cases who shouldn’t have responsibility for their own finances?

    br
    Free Member

    No chance, they’ve got a new Chief Exec and a new UK MD, there’ll be changes, but they’re not going anywhere!

    Ah, the ‘real’ reason that they’ve taken a write-off 🙂

    Advice I was given years ago was if I ever took over a dept (or joined a new company at a senior level) was to do an ‘audit’, and then I wouldn’t have to be responsible for someone else’s mess. Plus would get the ‘credit’ for clearing it up.

    This could all have been avoided by bringing back workhouses and debtors prisons.

    lunge
    Full Member

    At what point do they stop being victims of greedy banks and become hopeless cases who shouldn’t have responsibility for their own finances?

    This is a very fair and valid question, one that can’t be answered without evoking a fair amount of emotion.

    The idea of payday loans is not a completely unreasonable/unethical one. Lending someone a small amount for a short period of time for a small fee (not a small APR but a relatively small amount of money) is very useful for some people. To ban them outright is not IMO entirely reasonable. The problem is the people that use them/are attracted to them. The challenge any regulatory body would have is how to differentiate between who can and who can’t get them. You can’t do it purely on income or on outgoings, you need a combination of the 2 which relies on some honesty from the person looking for the loan, something very difficult to get.

    ScottChegg
    Free Member

    I though the Archbish of Canterbury was setting up an alternative?

    It isn’t an unreasonable business idea, but getting the balance between getting every last penny from hopeless cases and doing it for nothing and letting some folk not take responsibility for situations they walk into with their eyes wide open is tricky.

    Maybe the Church is the best solution. Goodness knows they don’t serve much other purpose.

    emsz
    Free Member

    I wonder how many of you guys realise just how hard it is for some people. I’m pretty mainstream, council tax, bank acct, regular wage. I can’t get a loan from a bank or a CC even if I wanted one. My finances are pretty tight, my ‘spare’ money for me is just a couple of hundred, and I’ve got a teeny rent. Some of my friends have loans from wonga and they’re going to probably get away with it. One needed a loan for a baby one needed a loan after a car crash he lost his job. I know people can be daft with money but for a lot of people places like wonga aren’t the last resort its the only choice

    brassneck
    Full Member

    Proper investment in credit unions would help. Perhaps the banks could restore a little of their lost image (in the public eye) by helping out here.

    ScottChegg
    Free Member

    I can’t get a loan from a bank or a CC even if I wanted one

    So just to clarify; you don’t want something you can’t get.

    That’s not too bad.

    The question is why can’t you? Is it previous bad debts? Or no credit history? Either can be sorted if you want to.

    Filling in some of the gaps in your post; you seem to be doing OK anyway. Not spending what you don’t have etc.

    One needed a loan for a baby

    Did they buy it?

    ninfan
    Free Member

    Proper investment in credit unions would help. Perhaps the banks could restore a little of their lost image (in the public eye) by helping out here.

    I wondered why credit unions had never taken off, then I put some savings in one for a year – realised they were charging pretty substantial APR’s to their customers but paying out a piss poor dividend to their savers in return, that was the end of that!

    emsz
    Free Member

    Scott, I guess it’s no credit history. I’ve no debts. My car came from bank of mum and dad. My point is that I don’t have access to a lot of financial services. I’m on a low wage, I don’t own a house. I know people have been turned down because of their postcode.

    The Baby was a “surprise” she had to buy a lot of stuff pretty fast

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