Britain’s biggest payday lender, Wonga, has found itself short of cash after reportedly racking up a £35m loss in 2014, after revenues slumped by a third to £215m in the wake of a series of scandals and an expensive restructuring.
According to Sky News the one-time star performer of the short-term lending market has come unstuck following the introduction of a price cap on loan and repayment charges, which could force as many as 400 payday lenders out of business.
One of the biggest scandals to hit the lender saw it ordered to pay nearly £20m in compensation and costs for issuing letters from a fictional law firm to 45,000 customers.
In response Wonga has been forced to halve its UK workforce to 325, reshape its management team and tighten its lending policy.
Commenting on the restructuring Wonga chairman Andy Haste said: “"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.”
As recently as 2013 Wonga was making £40m in profit, highlighting the precipitous fall from grace for the company which is now trying to diversify away from short-term loans.