Wonga is cutting around a third of its workforce to cut costs as it responds to a broader crackdown on unfair practices in the payday loan market.

The controversial lender said 325 jobs would be lost, mainly in the UK and Ireland. Wonga’s Dublin office will close as part of the plans, as will its Tel Aviv office.

Andy Haste, president of the lender, said: “Wonga can no longer maintain its high cost base, which must be significantly reduced to reflect the evolution of our business and market.

“Unfortunately, this means that we have had to make difficult but necessary decisions about the size of our workforce. We appreciate how difficult this period will be for all of our colleagues and will support them throughout the consultation process. “

Wonga’s decision to cut jobs came on the same day that The Competition and Markets Authority announced new rules to force payday lenders to be more transparent about their charges.. The CMA hopes to create more competition in the market, reducing costs for millions of consumers who depend on loans.

Wonga employs a total of 950 people worldwide, but all job losses are related to its UK payday loan business, which employs 650 people – around 280 in the UK, 175 in Ireland, 185 in South Africa and 10 in Israel.

It is understood that around 100 jobs will be allocated in the UK alone. All jobs will go to Ireland and Israel.

The group aims to achieve an overall cost savings of at least £ 25 million over the next two years, following a period of rapid expansion that saw costs triple between 2012 and 2014.

When Haste was appointed president last July, he said Wonga would become smaller and less profitable as he reduced the number of clients he lent to, imposing stricter loan criteria.

In October, the city’s watchdog, the Financial Conduct Authority, forced the company to write off £ 220 million in loans to 375,000 borrowers. to whom he admitted that they should never have received loans.

Wonga also announced Tuesday that its former chairman Robin Klein would be leaving the board after eight years.

The payday loan industry is undergoing a major shakeup as regulators seek to make the market fairer for cash-strapped consumers.

Under the new rules announced Tuesday, lenders will need to list their offers on price comparison websites and make it easier for customers to compare the total cost of different loans offered by various lenders.

Payday lenders will also need to provide clients with a summary of the total cost of their loans, as well as how additional fees, such as late payment, affect cost.

The recommendations were made after a 20-month investigation into the payday loan industry by the CMA.

The watchdog found that the lack of price competition among lenders had increased costs for borrowers, and most people did not seek to compare prices in part due to a lack of clear information on charges.

Simon Polito, who conducted the research, said: “We expect millions of clients to continue to depend on payday loans. Most clients take out multiple loans a year, and the total cost of paying too much for payday loans can increase over time. “

The CMA’s decision follows an earlier crackdown by the UK’s financial regulator, the Financial conduct authority (FCA).

The authority introduced a price limit on January 2. to ensure that borrowers are never forced to repay more than double their original loan amount.

Interest and fees were capped at 0.8% per day, which lowered the cost for most borrowers, while the total cost of a loan was capped at 100% of the original amount. The default fees would be capped at £ 15 to protect people struggling to pay off their debts.

Polito said: “The FCA price cap will reduce the overall price level and the scale of the price differentials, but we want to ensure more competition so that the cap does not simply become the benchmark price set by lenders for lenders. payday loans.

“We believe that costs can be reduced and we want to ensure that clients can take advantage of price competition to further reduce the cost of their loans. Only price competition will incentivize lenders to lower the cost borrowers pay for their loans. “

Joanna Elson, CEO of the charity Money Advice Trust, welcomed the action from the CMA and FCA, but added a note of caution: “This is good news for the consumer. More competition and transparency in the payday loan market will ensure that the FCA’s cap on the cost of credit remains just that: a cap, not the norm.

“This is a good example of how regulators are working together to make a difference in this sector. However, these improvements in the way payday loans are regulated should not dilute the core message that payday loans remain an extremely expensive way to borrow, ”he said.

Payday lenders will be required to post their product details on at least one FCA-authorized price comparison website. The CMA said Tuesday that it would work closely with the FCA to implement the new recommendations.

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