Business

Wonga defends UK business practices

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Media captionNiall Wass "The perception is that Wonga customers are poor and vulnerable but there are a silent majority of customers out there who are not".

Payday loan provider Wonga has told the BBC its business practices are being misrepresented and the vast majority of its customers are happy.

Its chief operating officer, Niall Wass, told Newsnight it had one million UK customers, of whom 99% were content with the company's lending terms.

Wonga's interest rates are typically 1% a day, an interest rate that mounts up rapidly if the loan is extended.

Such loans have faced criticism from many, including Church leaders.

Wonga, and other payday loan providers, will appear in front of MPs on Tuesday.

The Business, Innovation and Skills Committee is holding a one-off evidence session on the regulation of such companies.

Their business practices are already being looked at by a range of top regulators, including the Office of Fair Trading, the Competition Committee and the Financial Conduct Authority.

Mortgages

One of the country's best-known mortgage commentators, Ray Boulger from the advisers John Charcol, told Newsnight that taking out a payday loan could adversely affect any future mortgage offer: "Our experience is that mortgage lenders will often turn down requests for people who have had a payday loan - the regulator should require payday lenders to display this."

Mr Wass said he had not come across this problem, but he would look into the issue and report back to the Newsnight programme.

One customer, Liz Matthews, told the BBC she started with a loan of £300 but now owed £2,000 and was having sleepless nights.

Liz Matthews said she told the company she was employed in order to take out a loan, when, in fact, she was out of work.

But Mr Wass told the BBC that Wonga was careful about who it lends to.

He said his customers' views were not being properly represented by the media and others: "The perception is that Wonga customers are poor and vulnerable but there are a silent majority of customers out there who are not."

The company released a feature film this week that carries stories from 12 customers, who are broadly positive about the service they received.

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