According to a statement released by the regulator, its investigation into the payday lender revealed:
· Wonga does not obtain proof of consumers’ income and living expenses and also does not require consumers to provide supporting information or documentation to verify the income and living expenses in order to determine the ability of the consumers to repay the credit applied for;
· The consents to judgments issued by and/or on behalf of Wonga SA to consumers contain a clause which expresses, on behalf of consumers, consent to the jurisdiction of a court seated outside the area of jurisdiction of a court having concurrent jurisdiction; and;
· Wonga SA does not maintain and keep records of documentation in support of affordability assessments and the steps taken after default by consumers for the prescribed period of three years.
The regulator has requested that Wonga SA submit an audit report to confirm that it has implemented and procedures that comply with the National Credit Act in respect of these issues.
It has also ordered Wonga SA to remove adverse credit bureau listings on consumers’ credit records and also rescind judgments taken against consumers, at its own expense, on loans where Wonga SA did not obtain proof of consumers’ income and living expenses.
The company faces a stiff fine of R1 million or 10% of their annual turnover — whichever amount is higher. It could also lose its status as an authorised financial services provider if found guilty
Spokesperson for the NCR, Lebogang Selibi, said Wonga had until the end of August to comply.
“Should it fail to do so, the matter would be referred to the National Consumer Tribunal,” said Nthupang Magolego, manager for investigations and enforcement at the NCR. “The company faces a stiff fine of R1 million or 10% of their annual turnover — whichever amount is higher. It could also lose its status as an authorised financial services provider if found guilty.”
Magolego added the NCR initiated the investigation after they noticed discrepancies during their normal monitoring of credit lenders.
A spokesperson for Wonga said: “We received a Compliance Notice from the National Credit Regulator two weeks ago, which we take very seriously. We reviewed the letter with external advisors, who confirmed our view that we are fully compliant with the relevant rules. We have responded accordingly and requested a meeting. We commit to work with the NCR to resolve any concerns.”
South Africans Jonty Hurwitz and Errol Damelin launched Wonga in the UK in 2007. Operating in the country since 2012, Wonga SA provides small loans for a period of up to 50 days. Customers can use sliders on the website to choose loan amounts and terms.
Wonga SA CEO Kevin Hurwitz told DESTINY last year that the company planned to launch a similar product for small- to medium-sized businesses.
The UK parent company has also been beset with regulation problems. Two days ago, newly appointed Chairman Andy Haste promised to “reinvent” Wonga as an “accepted and respected” company.
This year, the company, which has been ridiculed by politicians and regulators in the UK, was implicated in a scam that involved sending out fake lawyers’ letters demanding payment. In June, the UK’s Financial Conduct Authority ordered the payday loan provider to pay £2,6 million (R47, 4 million) in compensation to customers impacted by the scam.
“We will become a more customer-focused, and inevitably, in the near term, a smaller and less profitable business,” Haste told The Telegraph. “However, we are determined to make the necessary changes and serve our customers in the right way, to repair our reputation and become a business with a long-term future and an accepted place in the financial services industry.”