The payday lender service Wonga is to cut its workforce by a third after a report by the Competition and Markets Authority imploring the market to be more transparent and conducive to competitiveness.
Wonga have said that 325 jobs are to be axed and that all the redundancies will relate to its UK loan business. Overall, Wonga employs 950 people but there are 650 related to the UK market. The upcoming cuts will affect offices in South Africa, Ireland and Israel as well as in the UK.
Wonga has a million active clients and is the largest of the payday lenders in Britain. The companyís new chairman, Andy Haste, has stated that the firm would have to become smaller as they scaled back from their previously high cost base. Wonga is trying to save a minimum of £25 million on costs in the next two years.
They have run into a number of problems in the last year, including the storm caused by Wongaís use of bogus legal notices and documents that were being used to chase debts from clients. This scheme saw 45,000 targeted in this manner. As a result, Wonga paid out 2.6 million in July 2014 to those customers after coordinating with the Financial Conduct Authority.
Moreover, they were compelled by the Financial Conduct Authority to clear £220 million in loans to a total of 370,000 clients in October last year, after it was concluded that they should not have offered the loans in the first place.
Mr. Haste stated: ìWonga can no longer sustain its high cost base, which must be significantly reduced to reflect our evolving business and market. Regrettably, this means weíve had to take tough but necessary decisions about the size of our workforce. We appreciate how difficult this period will be for all of our colleagues and weíll support them throughout the consultation process.î
In related news, Wonga publicised that Robin Klein, a former chairman, was relinquishing his place on their board after an eight year stay.