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Wonga sets payday loans cap at maximum rate

Wonga has capped the costs of its payday loans at the maximum rate of interest allowed by the FCA.

Last month the regulator said it plans to cap interest rate on payday loans at 0.8 per cent day, and that no one would repay more than double their initial loan. The rules come into effect from 2 January.

The Financial Times reports Wonga has set its cost cap at 0.8 per cent, down from 1 per cent. The payday lender has also capped late payment charges at £15, also the maximum allowed under FCA rules.

Wonga has also removed a £5.50 transmission fee while increasing the minimum amount that can be borrowed from £1 to £50.

Wonga UK chief executive Tara Kneafsey says: “We’re pleased to offer our customers a cap-compliant product ahead of the FCA’s January deadline. This and all the changes we’re making at Wonga reflect our commitment to provide short-term lending to the right customers in a responsible and transparent way.”

In October, Wonga was forced to write off 330,000 customer loans after the FCA evidence the lender was not properly checking customers’ ability to repay.

Earlier this year Wonga set aside £2.6m in customer redress for sending debt collection letters from non-existent law firms.

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