Wonga is capping interest rates on its loans at 0.8 per cent per day and is limiting the amount of debt its borrowers can rack up, the troubled payday lender announced yesterday.
The move comes in response to new rules from City watchdog the Financial Conduct Authority (FCA). Its crackdown on the sector is expected to drive most so-called payday lenders out of business.
Wonga is cutting its maximum interest rate from the current level of one per cent per day, and will cut its fee for missed payments by £5 to £15.
Along with removing its £5.50 transmission fee, Wonga has raised its minimum loan size from £1 to £50. It has also promised no customer will owe more in fees and interest than the sum originally borrowed.
“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,” said UK chief executive Tara Kneafsey.
She took the job in September after a year of turmoil at the lender, which has seen a series of bosses quit.