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Wonga told Business Insider in a statement that will cut 325 jobs to save £25 million.
"Our focus is on creating a business that meets the demand for short-term credit sustainably and responsibly, resulting in good customer outcomes," said Andy Haste, Chairman at Wonga in the statement. "We've already made significant changes, including appointing a new leadership team, implementing a new risk decision engine and tightening our lending criteria."
"However, Wonga can no longer sustain its high cost base which must be significantly reduced to reflect our evolving business and market. Regrettably, this means we've had to take tough but necessary decisions about the size of our workforce. We appreciate how difficult this period will be for all of our colleagues and we'll support them throughout the consultation process."
Wonga said it will launch the 30-day consultation period with its 950-strong workforce to determine who is at risk of redundancy.
The payday loan industry is worth around £2.2 billion in the UK. The sector offers short term loans but carry an incredibly high interest rate on repayments.
The statement comes on the same day as the Competition Markets Authority's announcement that it will force payday loan companies to make its products available for price comparison websites.
This is aimed at creating more transparency and competition within the industry.