A controversial British lender that has drawn opposition including from the Church of England over its high rates on Thursday said it was writing off debts from 330,000 customers. Wonga admitted it had made loans worth a total of £220 million (281 million euros, $356 million) to people who could not afford to repay them, adding that the debtors did not meet its new affordability criteria.
"For approximately 330,000 customers who are in arrears ... Wonga has agreed to write off all outstanding debt," the company said in a statement. The review comes under pressure from the Financial Conduct Authority (FCA) regulator and after public outcry over so-called payday lenders.
"We want to ensure we only lend to those who can reasonably afford the loan in question and during my review it became clear to me that this has unfortunately not always been the case," Wonga's new chairman Andy Haste said in a statement. Wonga is Britain's biggest payday lender - companies that usually specialise in a type of loan that is short-term, unsecured and carries high interest charges. The Archbishop of Canterbury Justin Welby, the spiritual leader of the Church of England, last year launched a network of church-backed credit unions to avoid hard-up people resorting to payday lenders and being unable to repay.
In an interview with Total Politics magazine, Welby said he had spoken with the head of Wonga and told him: "We're trying to compete you out of existence". Under its new lending rules, Wonga said it would be accepting fewer applications and that some existing customers would no longer be able to use the service. FCA director of supervision Clive Adamson said the move "should put the rest of the industry on notice".
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