The announcement that Wonga has had to write off around £220m of debt for around 350,000 borrowers, and take a direct hit of at least £35m, should send an icy chill through the world of investment and financial advice.
I am no fan of Wonga: I can remember the fear I felt when it announced it was entering into lending to small businesses. One can also take a view about whether payday lending is bad, or just a response to the market. In my view, it must make sense for the market to have a product that is clean, simple, and not the work of loan sharks. I also sense the idea of a maximum interest rate makes some sense and has worked in other parts of Europe. But the bigger worry is the precedent the FCA is setting. We all know the regulators are now taking a very active view of investor/borrower afforda...
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