Controversial payday lender Wonga has reported a pre-tax loss of £37.3m for 2014 after taking a £35m customer remediation hit following an intervention by the FCA.
The firm’s full-year results for the 12 months to 31 December 2014, published last week, reveal revenues plummeted by 31 per cent year-on-year, from £314.7m to £217.2m, driven by a “significant reduction” in UK consumer lending.
Operating costs rose by 12 per cent, from £133.7m to £150.2m, while a switch to a new third-party lending platform and risk decision system cost £15.3m.
The £35m remediation costs come after the firm agreed last year to write off 330,000 customers’ loan balances. This followed an FCA investigation that found evidence that the payday lender was failing to adequately assess people’s ability to meet repayments.
Wonga chief executive Andy Haste says: “On joining Wonga last July, I set out six priorities to deliver essential change and this period has been focused on delivering against those priorities.
“We said Wonga would be smaller and less profitable in the near term as we focus on creating a sustainable business that lends responsibly and transparently to customers who can afford to borrow from us.
“The full-year results are clear evidence of the changes we have made and are continuing to make. We know it will take time to repair our reputation and gain an accepted place in the financial services industry but we’re determined to deliver on our plans and serve our customers in the right way.”