NEWCASTLE United sponsor Wonga is set to cut 325 jobs under a “strategic refocus” of its consumer businesses, the firm announced today.
The payday lender has launched an immediate consultation with staff at risk of redundancy, which will run for 30 days.
Chairman Andy Haste said Wonga will become smaller and less profitable in the near term as it introduces changes to make sure it lends “fairly and responsibly”.
He said: “Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes.
“We’ve already made significant changes, including appointing a new leadership team, implementing a new risk decision engine and tightening our lending criteria.
“However, Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market.
“Regrettably, this means we’ve had to take tough but necessary decisions about the size of our workforce.
“We appreciate how difficult this period will be for all of our colleagues, and we’ll support them throughout the consultation process.”
It is expected a phased reduction in jobs will mainly affect teams that support the UK business from London, Dublin, Cape Town and Tel Aviv, eventually leaving Wonga with a UK-related workforce of around 325 people.
The remaining roles are expected to be based in London and Cape Town, with plans to close the Tel Aviv office by mid-2015 and the Dublin office by mid-2016.
Wonga is Britain’s biggest payday lender, with more than one million active customers.
It has recently tightened up its lending procedures ,as well as removing its adverts featuring elderly puppet characters from British TV screens.
The payday lending industry generally has been subject to a huge clampdown after coming under the FCA’s regulation last April.
Firms have only been granted interim permission to operate under the FCA’s toughened regime and they will have to apply for full permission to continue operating.
Wonga is due to apply for full authorisation later in the year.
Payday lenders are now no longer allowed to roll over a loan more than twice, and they can make only two unsuccessful attempts to claw money back out of a borrower’s account.
Last month, rules across the industry were tightened further, with a cap being placed on the overall cost of a payday loan as part of moves to stop such debts spiralling out of control.