Wonga reports a £37m loss as regulations bite

Wonga made a pre-tax loss of £37.3m in 2014 - a year which has seen the business attempt to overhaul its operations as it faces a welter of regulatory clamp-downs on the pay-day lending sector.

In 2013 Wonga made a pre-tax profit of £39.7m (€55.3m, $59m).

Last year the Financial Conduct Authority (FCA) introduced measures to protect consumers from debt spirals, which unscrupulous loan operators profits from thanks to astronomical compound interest.

The regulator stated that no consumer will ever have to pay back more than double what they originally borrowed.

In more restrictions enforced upon payday lenders, the Competition and Markets Authority announced on 24 February said loan companies must make their products available on at least one price comparison website, to foster a better deals for consumers.

The new rules are designed to stop the virulent spread of bottom-feeding lenders on Britain's high streets. Digesting the regulations, Wonga announced plans slash a third of its workforce. The firm said it plans to save some £25m over the next two years, during which it expects a period of negative income.

Paul Miles, Wonga's chief financial officer, said: "These numbers reflect the tough but necessary changes the business has made. Last year was focused on addressing the problems of the past and this will continue in 2015.

"We have the financial resources to invest in our people, systems and products, while significantly reducing our cost base to create a sustainable business for the long term. However, our 2015 results will reflect what will be another tough year."

Wonga chairman Andy Haste, who joined the loans firm in July last year, added: "Having worked in the financial services industry for more than 30 years, it is clear to me that there is an important role in society for such credit providers, but only if they put their customers first and lend responsibly.

"Regrettably, that has not always been the case at Wonga. The new management team is tackling deep-rooted issues, the complexity of which became more evident as we were able to assess those issues and put measures in place to effect change."