Wonga SA's boss shrugs off scathing findings in the UK

Wonga SA CEO Kevin Hurwitz is tight-lipped about whether its parent company in the UK is embarrassing the local operation, after it emerged that the online lender was guilty of misleading debt-collection tactics.

Hurwitz also ducked questions on the effect on the South African business of the slew of negative reports on Wonga in the UK. "The announcement made by the Financial Conduct Authority on Wednesday relates to the UK business only," Hurwitz said.

Wonga, which was founded by two South Africans, Errol Damelin and Jonty Hurwitz, Kevin's cousin, has courted controversy in the UK, where it has been accused of making hefty profits from the UK's poorest people with "payday lending" - providing short-term loans at interest rates of as high as 365% over 18 days.

This week, the authority found Wonga UK guilty of "unfair and misleading debt-collection practices" after it discovered that the payday lender sent fake lawyers' letters to borrowers on the letterheads of fictitious law firms, threatening them with legal action if they didn't pay up.

The offending letters were sent from 2008 to 2010 by "Barker & Lowe" and "Chainey, D'Amato & Shannon", to about 45 000 customers, giving the misleading impression that the outstanding debts of customers had been passed to a law firm or other third party. Some of these customers also paid additional collection charges after these letters were sent out.

Wonga agreed to pay £2.6-million (about R47.4-million) compensation to 45000 customers who received the letters, sparking fury in the British press from the likes of The Sun, which dubbed the company "Wronga" on its front page.

But Hurwitz played down the findings, saying they would not affect the South African business. He said the issues around these historical practices and system errors were limited to Wonga UK. He said the South African operations were a separate business within the Wonga Group with dedicated systems, technology and teams.

But, as a precautionary measure, the South African team was carrying out a thorough and ongoing review of its business.He would not say if the results of the review would be made public or whether an independent body would be allowed to investigate the business.

The company has refused to provide details of the size of the South African customer base or how much it has lent other than to say it has processed more than a million loan applications since the SA launch two years ago.

Hurwitz said Wonga SA's arrears were in single digits, with only a small minority of clients defaulting on repayments. He said it made several thousand loans a month.

Wonga SA has continuously had to distance itself from its controversial parent company.

In the UK, Wonga is seen as making a profit from Britain's poorest people. With about £1.2-billion lent through 4million loans to a million customers in 2012, Wonga remained Britain's biggest payday lender.

Earlier this month, Damelin stepped down within months of the company losing its CEO, Niall Wass. His co-founder Jonty Hurwitz stepped down last November.