13th December 2014
Wonga, one of the UK’s biggest payday loan lenders have started to test a new lower cost loan product to meet with the Financial Conduct Authority’s (FCA) new regulations which come in to force in January.
A report from Sky News states that Wonga have been offering loans to randomly selected customers who have been given better rates than other people who have borrowed from them.
Wonga have had to tighten their belts to comply with the FCA’s new rules which start on January 1st and to ensure this happens smoothly trials have started early.
From the new year the interest rate has been capped at 0.8% per day which simply means that customers will not be charged more that 80p per day for every £100 borrowed. There are also changes to the fees charged for loans being defaulted which will be capped at £15 and the fees accumulated can never be more than double the initial loan amount.
Wonga has not had the greatest year with the company fined for sending fake legal letters to customers who owe money on outstanding balances and all advertising suspended by a watchdog. Wonga have also written off around £220m in loans in what could be seen as a relationship building exercise to gain customers trust again and acknowledge their mistakes to improve their business practises.