Wonga profits more than halve on remediation costs to clients

Payday lender hit by multi-million pound bill to "fake lawyers" scandal

(Wonga)

Troubled payday lender Wonga has revealed a 53 per cent slump in pre-tax profits to £39.7m. However the number of high-cost loans it made in 2013 soared 15 per cent to 4.6million.

The short-term lender saw operating costs rise by more than half -56 per cent - from £85.8million to £133.7m. It said the decline in profits was driven by "remediation costs related to historic debt collection and systems issues".

That's believed to refer to a multiple-million pound bill to cover the costly legal and regulatory repair job after the "fake lawyers" scandal which blew up this summer.

But Tim Weller, Wonga’s interim chief executive, said today: “Investment in people, processes and our international businesses were key factors in the decline in Wonga’s 2013 profits.”

The company is reshaping its operations on the back of tougher consumer credit laws that came into force in April, which have hit all short-term credit providers.

In July the lender appointed the City big-hitter Andy Haste – former boss of the insurer RSA – as chairman in an attempt to restore its reputation.

He admitted that profits would fall as it refocused its business and his first act was the scrap the much-criticised puppets that helped flog the company's loans.