Wonga's loan write-off shows treating customers badly doesn't pay

The FCA has recently taken over responsibility for payday lenders and yesterday forced Wonga to write-off loans and interest to 375,000 customers who should never have been targeted. Andy Haste, the new CEO said Wonga had been "more concerned about the loan outcome than the customer outcome" as money had been lent to people who could never afford to repay. It is another clear example that short-term, unethical behaviour and unfair customer treatment is not sustainable long-term

This is going to be a major wake-up call for the payday lenders as the FCA imposes its "treating customer fairly" (TCF) policy where, among other things, making sure that products and services are appropriately targeted and understood by customers has to be proven. The focus on "customer outcomes" rather than just financial return is a big ask for many in financial services and the payday sector is going to need a major mind-set change to get even close to the requirements of its new regulator. Let's hope the new CEO can make haste with the changes.