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Wonga moves closer to savings account launch

Controversial payday loans site Wonga has accelerated its moves to launch a savings service as it looks to soften is perception among consumers.

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Wonga has rolled out an online research programme inviting customers to share their opinions on whether they would use a savings service from the company and which features would appeal to them.

Features mooted include the ability for customers to put a block on their account if they felt tempted to withdraw too much money, savings being used to fund other customers’ Wonga loans - which services such as Zopa already offer - and the ability to offset the charges and interests of future loans with the funds in their savings account.

It is understood the short-term lender has been considering a move into the savings market since last year but the recent online research project suggests launch of such a service is nearing.

A move into the savings market could help Wonga, which currently charges 4,214 per cent representative APR on its short-term loans and is often cited in media reports referring to bad practice in the payday loan market, soften its image.

Although Wonga is licensed by the Office of Fair Trading (OFT) it would need to be regulated by the Financial Conduct Authority to offer deposit accounts.

Damian Peachey, Wonga head of media relations, would not confirm or deny whether Wonga was considering a move into the savings market.

He added: “It’s not any secret about the way we see the consumer finance market, where there’s an opportunity to do things better using technology. [However] we have three areas of focus: loans, PayLater and Wonga for business. Those three products require a great deal of focus and, [indeed], two of them are relatively young.”

In March the OFT gave the leading 50 payday lenders 12 weeks to change their business practices - included how they advertise - or risk losing their licences, after it uncovered evidence of widespread irresponsible lending and failure to comply with the standards required of them. It also proposed to refer the payday lending market to the Competition Commission after it found evidence of “deep-rooted problems” in how lenders compete with each other.

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