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Wonga admits lending to those who could not afford it

Wonga's new chairman has admitted the company made loans to people who could not afford to repay.

The statement comes after the payday lender's agreed with the financial watchdog to make significant and immediate changes to its business.

Wonga has written off the debts of 330,000 customers. Credit: PA Wire

Debts for 330,000 customers currently in arrears of more than 30 days will have their loans written off, while 45,000 who are up to 29 days in arrears will be asked to repay without interest and charges over an extended period of four months.

Chairman Andy Haste said: "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.

"I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions."

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Wonga profits hit by £18 million fake letter scandal

Profits at payday lender Wonga more than halved in 2013 because the company was forced to pay £18.8 million in costs over a scandal involving fake legal letters.

Wonga expects to be 'smaller and less profitable' in the near term. Credit: PA Wire

In June, Wonga was forced to pay compensation by the Financial Conduct Authority (FCA) after sending legal letters from fake law firms to 45,000 customers.

The payday lender was found guilty of "unfair and misleading debt collection practices".

A 56% rise in operating costs due to investment in staff, infrastructure and its international businesses also contributed to the fall in profits.

Wonga name new chairman after fake letter scandal

The new chairman of payday lender Wonga has pledged "significant change" after the firm "made mistakes" in sending out letters from fake lawyers to customers in arrears.

ITV News Business Editor Joel Hills confirmed the appointment, tweeting:

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Church of England 'took a year' to sever Wonga ties

ITV News Consumer Editor Chris Choi reports:

Wonga: Police 'reassess' possibility of criminal probe

City of London Police said in a statement:

In March 2013 the Office of Fair Trading (OFT) met with the City of London Police to consider their (OFT's) investigation into Wonga and whether it should be referred to the National Policing Lead for Fraud.

The interests of the consumer were at the forefront of these discussions and directed the decision that the most appropriate course of action was for the OFT to continue to investigate as regulator focusing on but not limited to the consumer credit act, legal services act, and unfair trading regulations.

Now that the regulator's investigation has concluded and a compensation agreement has been reached with Wonga, the City of London Police will be reassessing whether a criminal investigation is now appropriate.

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