Wonga is set to axe more than a third of its 950-strong workforce in a bid to save £25 million.
The company, one of Britain’s most high-profile payday lenders, said it is making 325 staff redundant, in London, Dublin, Cape Town and Tel Aviv, and is closing the Israeli and Irish offices entirely.
The London-based firm’s cost-cutting plan, under new chairman Andy Haste, comes after Wonga’s profits halved last year following a multi-million pound bill as a result of the "fake lawyers" scandal when the lender sent pseudo-legal letters to customers demanding payment. The Financial Conduct Authority subsequently demanded that Wonga pay £2.6 million in compensation.
The controversial lender also revealed it is also walking away from lending for small businesses, selling its specialist Everline division, and said Robin Klein, Wonga’s former chairman and one of its earliest backers, was standing down from the board after eight years.
Wonga said it had to become "smaller and less profitable in the near-term as it introduces changes to ensure it always lends fairly and responsibly".
Haste, former boss of RSA insurance, added: “Wonga can no longer sustain its high cost base. We’ve had to take tough but necessary decisions about the size of our workforce.”
Wonga's announcement coincided with the release of the Competition and Markets Authority's final report on the payday lending market following a 20-month investigation.
The watchdog has confirmed that payday lenders will have to publish their rates and, crucially, the total amount payable on a price comparison website overseen by the Financial Conduct Authority.
The aim is to increase price competition between payday lenders and help borrowers get a better deal.