Demand for risk and compliance specialists within the payday loans market is set to continue to rocket in the next six months, after Wonga was forced to write off £220 million worth of debt.
Senior level instructions in the debt market have already risen considerably by 30 per cent compared to the same period last year, with recruitment experts predicting another possible 30 per cent jump. The Financial Conduct Authority’s (FCA) crackdown is expected to act as a warning signal to other providers that could be forced to forgive hundreds of millions of pounds of loans they made to customers who could not afford the repayments.
The regulator has forced Wonga to write off loans to 330,000 customers in arrears for 30 days or more. Another 45,000 customers will not have to pay interest on their loans – this group will also have the option of paying off their debt over an extended period of four months. In addition, the FCA hascalled for the firm to develop a permanent lending decision platform, which will be monitored by an expert reporting directly to the authority. Richard Abelson, director at specialist recruitment consultancy, MERJE, said: “Wonga’s introduction of affordability checks and significant debt write-off demonstrates the scrutiny payday lenders are now under from the FCA.
“It will undoubtedly come as a huge wake-up call to businesses within the sector, to ensure their risk and compliance functions are fit for purpose and robust enough to stand up to the investigations being carried out by the powers that be.” He added: “Skill shortages, and competition to secure the best employees when filling risk and compliance roles, have traditionally been a real issue within the industry. The FCA’s recent clampdown will only compel decision makers to invest further in recruitment for these positions, as the need for candidates with solid regulatory and risk management experience heightens.”
In 2010, the PPI mis-selling scandal sparked a similar surge in recruitment activity, with salaries for individuals within risk and compliance peaking, as employers faced the reality that earnings must be proportionate with the important role they play. Abelson continued: “I’m confident that the payday lending market will follow suit. The reality is that the majority of lenders and debt management firms will fail to meet with new industry standards being imposed. In turn, this could generate great expense and embarrassment should the FCA come calling.”
