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Wonga Cape Town staff affected by UK cuts

Feb 25 2015 11:38
Richard Partington, Bloomberg

London – The Wonga call centre staff headcount in Cape Town that supports the UK business would be reduced over time after the short-term loan platform announced plans to eliminate 325 jobs, a third of its workforce, to help it meet tough new rules that may put some payday lenders out of business.

Employees in London, Dublin, Cape Town and Tel Aviv will be affected as part of a plan to save about £25m (R444.59m) in costs over the next two years, Wonga said in an e-mailed statement on Tuesday. The London-based company, which currently employs 950 people, will close its Tel Aviv office this year and Dublin in 2016.

The South African consumer lending business www.wonga.co.za was unaffected by Tuesday's news.

The contact centre in Cape Town providing customer support, which included around 180 staff, were involved in supporting the UK lending business. The process to reduce the headcount in this division would happen over time and no staff would directly lose their jobs, Wonga told Fin24.

Wonga fined £2.6m

Wonga was fined £2.6m (R46.23m) by Britain’s Financial Conduct Authority in June for threatening to sue customers behind on payments in letters from fake law firms. The firm is also writing off £220m (R3.21bn) in loans, a person with knowledge of the matter said in October, after British regulators stepped up scrutiny of the market and strengthened rules to protect consumers.

“Wonga can no longer sustain its high cost base, which must be significantly reduced,” chairperson Andy Haste said in the statement. “Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly.”

Some UK payday lenders may leave the business in the wake of stricter regulation at the start of this year, Martin Wheatley, the FCA’s chief executive officer, has said. Wonga, CashEuroNet UK LLC and Dollar Financial UK are the three largest UK payday lenders, according to Bloomberg Intelligence.

Board changes

Wonga said it hired Simon Allen, a former UK chief operating officer at Aon Plc and Prudential, as an independent non-executive director. It’s also plans to appoint two more board members.

Robin Klein, a partner at Index Ventures who was an “early-stage Wonga investor” and former chairman of the company, stepped down from the board, Wonga said.

Payday lenders will have to publish details of their products on at least one price comparison website and improve disclosure of fees charged to customers for late payments to help boost transparency, the UK’s antitrust Competition and Markets Authority said in a separate statement on Tuesday.

wonga  |  retrenchment
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