Tagged: Wonga

Wonga Group to halve UK workforce as part of restructure

Wonga Group will remain as Newcastle United sponsor until at least 2017, despite a major restructuring and cost reduction programme that will see it shed half of the workforce supporting its UK arm.

The company has announced a strategic refocus on its consumer business, which will see its UK headcount drop from 650 to 325 as its alters its business model in light of the rapidly changing short-term credit market.

A spokesman confirmed that all marketing is under review as part of the process.

However, he added:

“As far as Newcastle United is concerned, we have a contractual obligation until 2017.”

It is expected the phased reduction in roles will primarily impact teams that support the UK business from London, Dublin, Cape Town and Tel Aviv.

The remaining roles are expected to be based in London and Cape Town, with plans to close the Tel Aviv office by mid-2015 and the Dublin office by mid-2016.

Wonga will immediately launch a formal 30 day consultation period for those at risk of redundancy and expects all changes to be complete within 12 months.

Andy Haste, who was appointed group chairman in July, said:

“Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes.

“We’ve already made significant changes, including appointing a new leadership team, implementing a new risk decision engine and tightening our lending criteria.

“However, Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market.

“Regrettably, this means we’ve had to take tough but necessary decisions about the size of our workforce.

“We appreciate how difficult this period will be for all of our colleagues and we’ll support them throughout the consultation process.”

As part of the restructuring plan, Wonga – which has also agreed to sell its small business lending brand Everline to Orange Money Ltd – will now focus on its core consumer businesses in the UK and overseas.

It has likewise filed an application for authorisation with the Financial Conduct Authority in the UK, beginning a regulatory process that can last up to a year.

Source – Newcastle Evening Chronicle, 24 Feb 2015

Loan sharks could take advantage of payday lending caps, according to CAB

Loan sharks could cash in following caps on payday lending, according to the Citizens’ Advice Bureau.

Caps limiting the interest rate and fees instated by so-called payday lenders have been introduced by the Financial Conduct Authority in a bid to protect people struggling with debt.

As of Friday, January 2, companies such as Wonga – who previously had annual interest rates higher than 5,000 per cent – must comply with regulations that will see interest and fees capped at 0.8 per cent per day.

Under the new rules, the total cost of a loan will be limited to 100 per cent of the original sum and default fees will be capped at £15.

While the move has been welcomed by the Darlington Citizens Advice Bureau (CAB), the organisation has warned the changes may cause more vulnerable people to fall prey to loan sharks.

Darlington CAB’s Dawn Gill expressed fears that loan sharks could take advantage of those now unable to access as much money as they need.

She said:

“Caps are a good thing but clients will still want money from somewhere – they’re being protected from high interest rates but companies may not lend as much.

“They may not be able to get as much as they were expecting or anything at all.

 “If they don’t get what they want, they are in danger of reaching out to someone like a loan shark instead of coming to us, for example.

“We haven’t seen it happen yet but the changes are still new and it’s a worry.”

Ms Gill urged payday lenders to work with CABs in order to help their clients manage their finances.

She said:

“The ideal situation would be for payday lenders to refer their clients to us before they take out a loan at all and let us help them to maximise and manage their income.

“I’d advise people to come to us and let us help them find ways to manage.

“We can help with benefits, cutting energy bills or working out incomings and outgoings and priorities.

“There are a lot of people prioritising paying back intimidating people who knocked at their door with money rather than paying their rent or council tax but they could end up losing their home.”

To anonymously report a loan shark, contact the Illegal Money Lending Team by emailing reportaloanshark@stoploansharks.gov.uk

or calling 0300-555-2222.

Source –  Northern Echo,  20 Jan 2015

Middlesbrough Council to provide £85,000 to establish ‘community bank’ in town

A community bank in Middlesbrough town centre to challenge pay day lenders has been recommended by council chiefs.

A new community bank to be based in the heart of Middlesbrough is at the core of Labour mayoral candidate Cllr Dave Budd’s campaign to secure the position in May, when current Independent Mayor Ray Mallon will step down.

Deputy Mayor Cllr Budd, Executive member for finance and governance, has recommended in a report to be put before the Executive on Tuesday that Moneywise Community Banking be provided with a two-year grant totalling £85,000 to support its plans to locate to a town centre premises.

It aims to help over three years 4,000 new members, provide 1,200 training courses and issue loans amounting to just over £0.5m.

A loan from Moneywise of £300 with a typical APR of 26.7% over 12 months, the total repayable amount would be £342.79.

In comparison, the council report states the same loan from a doorstep lender (APR 272%) would cost £546 to repay; from an online instant loan (APR 1058%) it would cost £627.54 to repay; and from an illegal lender or loan shark (APR 1000%), it would cost £2,900 to repay.

Moneywise Community Banking – a not-for-profit member owned credit union – will deliver a number of financial support services including safe and easy savings; an optional Visa debit card service; low cost loans; Christmas savings club; white goods and furniture at discounted prices; free employability training; and debt and money management advice.

It was originally based in Hartlepool and now operates across Teesside, East Durham and North Yorkshire with offices in Redcar, Hartlepool and Scarborough. It is regulated by the Financial Services Authority and the Prudential Regulation Authority, which is also the case with banks.

All member savings within Moneywise are fully protected by the Financial Services Compensation Scheme so members can save safely in the knowledge that they cannot lose their savings, the report said.

Cllr Budd has said previously that a “modern, effective” credit union for Middlesbrough has to be “competitive and give an instant answer like companies such as Wonga do”.

“This has worked elsewhere and it can work in Middlesbrough. It will offer credit at fair rates and gives all Middlesbrough residents the opportunity for greater financial security.”

The report states that the two-year £85,000 grant would be funded through existing resources within the Community Support Fund.

Moneywise and Middlesbrough Council would work together to identify suitable premises.

Source –  Middlesbrough Evening Gazette, 14 Jan 2015

Miliband turns his fire on Mike Ashley’s Sports Direct over zero hour contracts

Labour leader Ed Miliband is to turn his fire on Newcastle United owner Mike Ashley’s Sports Direct chain, in a major speech attacking “zero hour” contracts.

Mr Miliband will accuse the chain of “Victorian practices” in the way it treats staff.

And he will highlight plans to change the law – so that workers with regular shifts have the legal right to a regular contract, if Labour wins the next election.

It comes as the Labour leader continues his fightback following reports that some MPs had concerns about his leadership of the party.

Earlier this week he delivered a speech pledging to stand up to “vested interests”, to ensure hard work was rewarded and to stamp down on tax avoidance by the very wealthy.

Today he is set to focus particularly on zero hours contracts, in which work is not guaranteed and staff are called in as needed.

Mr Miliband is to say:

“A graphic symbol of what is wrong with the way this country is run is the army of people working on zero-hours contracts with no security while a few people at the top get away with paying zero tax.

“This zero-zero economy shows we live in a deeply unequal, deeply unfair, deeply unjust country run for a few at the top, not for most people. It is a country I am determined to change.”

And he will highlight Sports Direct, which has 400 stores and is estimated to have 17,000 people on zero hours contracts.

“Sports Direct has thousands of its employers on zero-hours contracts, the vast majority of its workforce.

“Sports Direct has predictable turnover, it is a modern company with stores on many high streets and, judging by its success, where many people shop.

“But for too many of its employees, Sports Direct is a bad place to work.

“This is not about exceptional use of zero-hours contracts for short term or seasonal work which some employers and workers may find convenient. This is the way Sports Direct employs the vast majority of its workforce.

“These Victorian practices have no place in the 21st Century.”

Mr Miliband will set out plans to legislate to give employees the legal right to a regular contract if they are working regular hours; to refuse demands that they are available over and above their contracted hours, and to compensation when shifts are cancelled at short notice.

An inquiry commissioned by Labour and conducted by businessman Norman Pickavance, former HR & Communications director at supermarket chain Morrisons, reported earlier this year:

Sports Direct has expanded dramatically since 2008 and gained a large share of the sports retail market. About 17,000 of their 20,000 strong staff are employed on zero-hours contracts.”

Last month the firm said it would make its employment terms clearer in job adverts for zero-hours posts, following legal action brought by a former employee.

Mr Ashley, an entrepreneur who built up his business from a single sports shop in Maidenhead, bought a majority share in the club in 2007.

Meanwhile, controversial payday lender Wonga has agreed with Newcastle United to remove its logo from all children’s replica shirts and training wear from the 2016/17 season.

Wonga said it followed a review of its marketing launched by new chairman Andy Haste in July to ensure that none of it could inadvertently appeal to the very young or vulnerable.

It has already ended its puppet advertising campaign.

The company said the logo was being removed from children’s kit at the earliest possible opportunity, and that due to kit production schedules this would be from the start of the 2016/17 season – the last season of the current shirt sponsorship deal.

Darryl Bowman, Wonga marketing director said: “As a responsible lender we believe removing our logo from children’s replica shirts and training wear is the right thing to do. We appreciate the club’s support in this matter.”

Newcastle United managing director Lee Charnley said: “We understand and respect Wonga’s position and are happy to support their decision.”

Source –  Newcastle Evening Chronicle,  15 Nov 2014

DWP brings new hope to payday lenders

In a move that will bring new hope to struggling payday lenders, the DWP have extended the waiting days for employment and support allowance (ESA) and jobseeker’s allowance (JSA) from 3 days to 7 days from today.

The new rules mean that claimants applying for ESA or JSA will not be entitled for any payments during the first 7 days that they would otherwise be eligible for benefits.

Claimants will not be affected if they have made a previous claim for ESA or JSA in the preceding three months, however, as they will be considered to have already served their waiting days. ESA claimants will also not be affected if they have claimed statutory sick pay immediately before claiming ESA.

Terminally ill claimants are exempt from serving waiting days.

The move has brought condemnation from trade unions and charities, but the chancellor, George Osborne, argues that: “Those first seven days should be spent looking for work and not looking to sign on.”

Last month Wonga was forced by the Financial Conduct Authority to write off £220 million in loans interest and charges to people who should never have been given loans in the first place. There have been calls for other payday lenders to suffer similar penalties.

But the decision by the Coalition to extend the waiting period for ESA and JSA to seven days means that there is likely to be an upsurge in applications for short-term loans by people with no other resources to fall back on.

Given that waiting times for a first payment of Universal Credit (UC) are likely to be around 6 weeks – and up to six months for people whose earnings were too high, according to new government proposals – and bearing in mind that UC also includes a housing costs element, the future for payday lenders is beginning to look rosy again.

Source –  Benefits & Work,  27 Oct 2014

http://www.benefitsandwork.co.uk/news/2919-dwp-brings-new-hope-to-payday-lenders

Northumbrian Water among suppliers accused of Wonga tactics after sending out debt collection letters

A North East water supplier has stopped issuing “frightening” debt collection letters after its tactics were likened to controversial pay day loan company Wonga.

Northumbrian Water was found to be among half of UK suppliers sending correspondence which appears to be from an external debt agency, but is actually from the water company itself.

The news follows June’s ruling by the Financial Conduct Authority (FCA) that 45,000 Wonga customers must be compensated after being sent letters from nonexistent law firm threatening legal action, while similar practices were also highlighted among banks and energy firms.

Northumbrian Water, which stopped the policy earlier this year, used the name Alexander James in large print at the top of the letters, but say it was clearly linked to the company.

In total, 12 of the UK’s largest water suppliers have been found to have taken part in the practice – which water watchdog Ofwat has written to companies with concerns over – while five are still doing it.

Shona Alexander is chief executive of Newcastle Citizens Advice Bureau, which offers free debt advice.

She said:

It is good news Northumbrian Water has stopped using this letterhead and it is disappointing to hear some companies are still using it.

“It is bad practice. By saying Alexander James at the top it looks to the client as a debt collector and that is frightening. Then at the very bottom in small print it says this is part of Northumbrian Water.

“At best it is unfair and causes distress, and at worst it is deliberately misleading.”

A Northumbrian Water spokeswoman said:

“The Alexander James brand was used to encourage customers who were not paying their bill to contact us to talk about a payment plan and to receive debt advice. It was very clear that Alexander James was part of Northumbrian Water Limited.

“We took the precautionary decision to suspend using the brand name the day after the Wonga story broke. After researching why the FCA took action against Wonga, we believe we have complied with best practise as the brand name was registered with relevant financial agencies to ensure transparency and our consumer watchdog, the Consumer Council for Water, was also fully aware we were using this brand name.

“After a review we have now decided that we will not be using the Alexander James brand in the future although our use of it was transparent and compliant.”

Source –  Newcastle Evening Chronicle,  16 Oct 2014

Wonga writes off 330,000-customer debts

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.”

Source –  Northern Echo,  02 Oct 2014

Controversial Newcastle United sponsor Wonga suffers slump in profits

Newcastle United sponsor, Wonga, the controversial payday lender, has reported a slump in profits as it counts the cost of a drive to clean up the image of the business.

Wonga said the 53 per cent slide in profits to £39.7m in 2013 was in part due to a one-off charge in relation to a recent scandal over fake legal letters, which were used in order to chase struggling customers into paying up.

The company said it expects that it will be “smaller and less profitable” in the near term while it builds a more sustainable business for the future.

Source –  Northern Echo, 30 Sept 2014

Wonga say they are committed to Newcastle United sponsorship

Labour MPs have increased the pressure on payday lenders Wonga to quit their Newcastle United shirt sponsorship deal – but the company say they are committed to the club.

The finance firm’s new chairman Andy Haste announced on Monday he would be reviewing the company’s advertising and marketing “to make sure that we don’t leave any impression that we are trying to influence or target the very young”.

But with thousands of junior Magpies fans wearing Wonga-sponsored shirts, some MPs said they hope he will end to Wonga’s partnership with NUFC.

A spokesman for Wonga said that its chairman had been asked a comment about Wonga’s marketing in general in the wake of the company’s decision to ditch its “puppet” advertising campaign, and had made no specific remarks regarding Newcastle United.

We continue to be proud sponsors of Newcastle United FC,” she said. “Our new chairman, Andy Haste, was commenting on our general marketing approach – he did not make any direct comment on our sponsorship of the club.”

Gateshead Mp Ian Mearns said: “If Wonga express an interest in disassociating themselves because of a duty to young fans in their new business model then I’d hope Mike Ashley would let them out of their contract and find a new sponsor.

“But it will depend on what Wonga are contractually obliged to do in terms of the longevity of their sponsorship deal.

“It might be very difficult to extricate themselves from it.”

Newcastle Central MP Chi Onwurah said the possibility of Wonga continuing as sponsor would be in direct contradiction of its vow not to target children.

She said: “The idea that Wonga is not targeting children when its logo is emblazoned across toddlers throughout Tyneside would be laughable were it not so serious,” she said.

“I look forward to a day when Newcastle United’s sponsors are not a source of shame for so many fans, until then I will not be attending matches at the stadium.”

One the issue of the ground re-naming, MPs refused to be drawn.

Wonga paid club owner Mike Ashley to “return” the ground’s name to St James’ Park in October 2012 after he had named it the Sports Direct Arena after his sports shop empire.

But Ms Onwurah refused to be grateful for the move.

She said: “I am not grateful to Wonga for retaining the name St James Park. Mike Ashley should never have changed it to Sports Direct in the first place.”

However, Mr Mearns welcomed the new Wonga chairman’s admission that in the past it has made “some serious mistakes” and his desire for the company to operate in a “responsible and transparent manner.”

I very much welcomed the comments from Wonga and I think some of that comes from a realisation by them that hopefully there will be much more stringent regulation from the FCA,” he said. “They’re waking up and smelling the coffee and taking a realistic attitude.”

Source – Newcastle Evening Chronicle, 15 July 2014

The minimum income is 2.5 times what people get on benefits – but still they are labelled scroungers

Mike Sivier's blog

140630minimumincome The numbers speak for themselves: Under ‘Adequacy of safety-net benefits’, EVERY SINGLE INCOME GROUP has lost out. While others have suffered a great percentage drop, single working-age people remain the least able to make ends meet.

“How much money do you need for an adequate standard of living?”

That is the question posed every year by the Joseph Rowntree Foundation – and every year the organisation calculates how much people have to earn – taking into account their family circumstances, the changing cost of these essentials and changes to the tax and benefit system – to reach this benchmark.

This year’s research finds:

A lone parent with one child now needs to earn more than £27,100 per year – up from £12,000 in 2008. A couple with two children need to earn more than £20,200 each, compared to £13,900 each in 2008. Single working-age people must now earn more…

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