Wonga told to cancel charges on unaffordable loan

19th December 2014

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A customer of payday lender Wonga has won a battle to have the interest and fees refunded on a loan that has been written off.

 

In October, Wonga agreeded to cancel the debts of 330,000 customers who had been given loans without proper affordability checks, meaning many of them were unable to afford to pay back the loans and were trapped in a debt spiral of repayments and fees.

 

Ami Jarman, 24, was one of the customers who had her loan wiped but she took the case to the ombudsman in order to have the charges on the loan cancelled to and won, reported the BBC.

 

Jarman took out £100 to pay for a new car tyre but could not afford to pay it back.

 

In total she was given loans worth £9,000 over four years and would have to pay more than £11,000 back once charges were added.

 

She agreed that she should have been more aware of the charges and fees but argued that payday lenders should be more responsible ‘and should not have lent me this money’, she told BBC Radio 4.

 

The Financial Ombudsman Service ruled that Wonga should wipe the outstanding fees on the loan.

 

The financial regulator recently clamped down on payday lenders, introducing a price cap from July.

 

Lenders like Wonga will not be able to charge more than 0.8% in interest per day and fixed default fees have been capped at £15 to help borrowers struggling to repay the loans. Lenders will not be able to charge more than 100% of the original loan if people cannot pay so that borrowers never have to pay back more in fees and interest than the amount they borrowed.

 

 

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