How did a variety of pigeon and a kind of vine come to be associated with what is generally acknowledged to be the unacceptable face of money lending? In addition to being an Australian white-faced pigeon a wonga wonga is a vine which grows vigorously, also in Australia. Wonga came into common use as another word for money in the 1990’s (probably derived from ‘wonger’ the Romany word for coal). It was then adopted as its name by a company which became the most successful and prominent payday lender
Payday loans are short-term loans for small amounts of money. They are available from high street shops and Internet sites. Payday loans can be easy to get but interest rates are very high. There may be other ways for you to sort out your short-term money problem so think about the alternatives before you borrow from a payday lender.
If you decide to get a payday loan, shop around and compare the interest and charges before you borrow. Make sure you are clear about what will happen if you can’t pay it back. Before giving you any money, a lender should check you’ve got enough money coming in each month to be able pay the loan back.
The lender should also explain the main features of the loan, including how much you will have to pay back, what happens if you do not pay the loan back, that you may be charged extra if you do not pay the loan back on time and that the loan is not suitable for
Wonga failed to observe these conditions and has now agreed with the Financial Conduct Authority (FCA) to make changes to how it lends to customers. It has entered into an agreement, known as a voluntary requirement (VREQ), with the FCA requiring it to make significant changes to its business immediately. When it took over regulation of consumer credit in April of this year, the FCA requested information about the volume of Wonga’s relending rates. The information received suggested that Wonga was not checking customers’ ability to meet repayments.
The FCA has agreed an approach with Wonga for those customers whose ability to repay the loans was not adequately checked. Approximately 330,000 customers who are currently more than 30 days in arrears will have the balance of their loan written off and will owe Wonga nothing. Approximately 45,000 customers who are between 0 and 29 days in arrears will be asked to repay their debt without interest and charges and will be given an option of paying off their debt over an extended period of four months.
Wonga should have contacted all affected customers by 10 October to notify them if they will be included in the redress programme. Customers should continue to make re-payments to Wonga unless they are told to stop by the firm. Borrowers who are experiencing financial difficulty, should contact Wonga to discuss their options. The FCA has said it will continue to work with Wonga to identify whether there is any other remedial action required. If necessary, further details will be communicated by the firm in due course. This means that Wonga will need to make sure its loans are affordable and customers are able to pay them back before loans are taken out.