Wonga Losses Soar As Payday Price Cap Bites

Britain's biggest payday lender saw losses double last year as a price cap imposed by the City regulator triggered a sharp fall in revenues.

Wonga Group recorded a pre-tax loss of £80.2m in 2015, compared to £38.1m a year earlier, raising questions about the ability of one of the UK's most controversial financial services brands to reinvent itself in an era of tighter regulation.

The results also showed a 64% decline in Wonga's revenues to £77.3m from £217.2m in 2014, confirming a Sky News report .

The figures take Wonga's losses for the last two years to in excess of £100m, underlining the battle facing its management team and shareholders to turn around its financial performance.

The company, which is led by Andy Haste, a former boss of RSA, the insurance company, wants to diversify its business away from the short-term lending model that made it a lightning rod for political and public anger over the sector's rapid growth.

Mr Haste said: "We have made real progress towards creating a sustainable business with an accepted place on financial services."

Finance director Paul Miles said the slump in revenues was driven by a "significant but expected reduction in lending volumes globally".

He said: "In the UK, the reduction reflects a full year's impact of the stricter lending criteria we implemented in late 2014 and the price cap introduced by the UK regulator in early 2015."

Wonga's slump into the red for 2014 followed a string of regulatory settlements, customer redress and restructuring costs triggered by the loss of more than 300 jobs.

Last year, it was ordered by the City watchdog to pay more than £2.5m in compensation to 45,000 customers who were sent letters purporting to be from law firms but which in fact did not exist.