Wonga, the biggest payday loans lender in the UK, saw the introduction of tougher industry regulations affect its performance, revealing its losses doubled in 2015.
A pre-tax loss of £80.2m for 2015 was reported, a sizeable increase on the £38.1m pre-tax loss for 2014. The payday loans company lost £76.5m after tax, while in 2014 it was £43.6m.
The losses have been strongly driven by changes to the rules used to accept applications for payday loans, at the end of 2014. In early 2015, a new price cap was introduced, to help offer more protection to customers, and it led to a number of payday loans companies dropping out of the industry.
The Financial Conduct Authority (FCA) has been working to improve the financial safety of people who take out payday loans, since being appointed the regulator of the industry two years ago.
Wonga’s chairman, Andy Haste, who joined in 2014 from his position as chief executive of RSA, said: “We have made real progress towards creating a sustainable business with an accepted place in financial services. These results are in line with the plans we put together when joining Wonga.”
“They reflect a full year’s impact of the stricter lending criteria we implemented in late 2014, the price cap introduced by the UK regulator in early 2015, and the necessary investment we have made to transform the business. We expect 2016 to mark a turning point in our financial performance.”