Christians Against Poverty welcomes the news that payday lender Wonga are writing off £220m of debts for 330,000 of the poorest people in the UK.
As highlighted by our recent client survey, 22% of our clients had taken out a payday loan before requesting our help. What concerned us was that 77% of these did so to pay for food and over half used their loan to pay for energy bills. Clients also told us that very little was asked about their income and expenditure before being granted the loan, so the knowledge that more is being done by Wonga to ensure checks are in place is reassuring.
For any of our clients who are eligible to have their debts cleared by Wonga, the average amount that will be cleared would be equivalent to them paying off four and a half months worth of debt. This will release a significant amount of pressure from them, especially as the majority of our clients are already on a low income.
CAP has been working with payday loan companies in recent years, looking together to improve lending practices to ensure better regulations and better care for vulnerable clients. We are pleased with this development and hope that these positive steps are reflected across the industry.
It’s great to hear that Wonga are re-addressing their responsibility to their customers. People who have suffered the consequences of being given credit when they couldn’t afford it will now see that written off, leaving them in a better position to find a way out of debt. We would urge anyone, whose debt is written off by Wonga, to seek any further help they need with budgeting and working their way completely out of debt.
We look forward to continuing to work together with payday lenders and the industry as more is done to protect those with the very least.