By Mark Kleinman, City Editor
Britain's biggest payday lender has begun secret trials of lower-cost loans just weeks before a deadline set by the City regulator to comply with a new crackdown on the industry.
Sky News has learnt that Wonga has in the last fortnight started offering finance to a number of randomly selected customers who are offered substantially better terms than other borrowers.
The move is designed to ensure that Wonga's systems are able to adhere to the Financial Conduct Authority's new rulebook when it comes into effect on New Year's Day.
Under the FCA's rules, payday loans will have interest capped at 0.8% per day, meaning that a customer borrowing £100 will accrue a maximum level of interest of 80p per 24 hours.
Fixed default fees will be restricted to £15, while there will be an overall cost cap of 100% of the initial loan, the regulator said last month.
A Wonga spokesman declined to disclose details of the new cap-compliant product, but one insider said that it was likely to be the subject of an announcement and national launch ahead of the January deadline.
"The product makes it clear to customers what they will pay in total in pounds and pence but there is no final date yet for its launch because it is still being trialled," the source said.
Last week, Mr Lender, another short-term credit provider, announced that it was introducing the new terms to ensure compliance with the FCA's demands several weeks ahead of schedule.
The City watchdog believes that the introduction of a cap on the cost of payday loans will force most existing operators out of business, which has prompted some concerns that desperate consumers will be forced to seek even less palatable alternatives to borrow money.
The payday lending sector has accused regulators and politicians of demonising it, but executives admit that a series of scandals has made rehabilitating its image all but impossible.
Wonga has been fined for sending fake legal letters to customers in arrears, seen advertisements banned by a watchdog and written off £220m in loans after talks with the FCA about its business practices.
The company, which is owned by a consortium of prominent investors in technology groups, has overhauled its top management team this year, bringing in Andy Haste, the former boss of insurer RSA in an attempt to restore credibility.
The FCA, which intends to review the price cap in 2017, has also announced new rules for regulating payday loan intermediaries which include preventing them from charging fees and from requesting customers' payment details.
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