WONGA is to write off the debts of 330,000 customers after it admitted it has made loans to people who could not afford to repay them.

The move by the pay-day lender comes after an agreement with the Financial Conduct Authority (FCA) that requires it to make significant changes to its business immediately.

The review means that about 330,000 customers who are currently in excess of 30 days in arrears will have the balance of their loan written off and will owe Wonga nothing.

Approximately 45,000 customers who are up to 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's new 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."
 

ARCHBISHOP WELCOMES DEBT WRITE-OFF

The Northern Echo: Rt Rev Justin Welby

Archbishop of Canterbury Justin Welby, pictured above, has welcomed pay day loan firm Wonga's decision to write off debt as an effort to put right some of the things that have gone wrong in the past.

But the head of the Anglican Church said the major issue was to create a reformed financial system.

"The big issue is to create a financial system that gives access to the poor and hope for the poorest in our lands, to be able to flourish and develop and have proper access to finance, not just for loans but for savings. For lives in which finance is a good servant, not a bad master."

Mr Welby has been a high-profile opponent of pay day lenders.

But it was revealed earlier this year that the Church of England had £75,000 indirectly invested in Wonga out of investments totalling £5.2 billion.

The revelation came after the archbishop received widespread publicity when he told Errol Damelin, Wonga chief executive, that the Church of England wanted to drive the pay day lenders out of business through the creation of credit unions.

During a visit to Belfast today he said: "I welcome anything in which the pay day lenders are involved in seeking to put right some of the things that have gone wrong in the past, which has left people burdened by debt that should never have been there, caught up in things which sometimes they did not fully see what they were getting into."

The Church of England, which claims to have a strong ethical investment policy that explicitly bans companies involved in pay day lending, had invested in Accel Partners, the US venture capital firm that led Wonga's 2009 fundraising.

Mr Welby said in July that he was irritated and embarrassed that Church funds were being funnelled into Wonga and said he would seek to remedy the situation.

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