Tough affordability checks should be the norm, says Harrington Brooks
As a result of Wonga putting in place tough new affordability checks and writing off unpaid debts, Harrington Brooks will be able to remove over £3m of Wonga debt from customers financial management plans, the firm revealed today.
More than 10,000 of Harrington Brooks’ customers have Wonga debts and will no doubt welcome the news that the lender in total has written off £220 million worth of debts for 330,000 of its customers. A further 45,000 of Wonga’s customers in arrears will no longer have to pay interest on their loans.
However, the problem does not stop at Wonga. The FCA’s director of supervision, Clive Adamson, has said that the announcement should “put the rest of the industry on notice”, and Harrington Brooks agrees. Around 45% of Harrington Brooks’ customers have taken out a payday loan, and today the debt management firm is calling on all payday lenders to ensure that they consistently carry out robust affordability checks for their customers.
Matthew Cheetham, Chief Executive of Harrington Brooks said: “We want to see every payday lender in the sector follow Wonga’s lead and introduce stricter lending criteria to address poor lending decisions. For too long the high-cost-credit sector has chased volumes causing considerable customer detriment. Harrington Brooks welcomes the efforts of the FCA to clean up the sector, but it is imperative that the regulator continues to enforce the new affordability requirements that came into effect in April.”