Wonga chairman Errol Damelin quits

Sick of having to defend the company from political attacks and public criticism, battle weary Wonga founder Errol Damelin is stepping down as chairman.

by Kate Bassett
Last Updated: 31 Mar 2014

Errol Damelin has had enough.

Since setting up online lender Wonga in 2007, the South African entrepreneur has faced a battering from politicians, the public and the Church of England. His business model, which allows consumers to borrow up to £1,000 for 30 days on an annualised percentage interest rate of 5,853%, has been branded 'immoral' for preying on cash-strapped Brits.

The South African entrepreneur has always defended Wonga's sky-high interest rates, saying that the company gives people a choice over how much they borrow and for how long, and that its affordability checks are similar to those used by credit card companies. 'It’s a controversial sector – and I’m okay with that. A lot of the great entrepreneurial businesses have been built in controversial spaces. Just look at Betfair, PayPal, Google, Skype, Spotify and Facebook.'

But it seems that the accusations of 'vulture capitalism' and 'legal loan sharking' finally wore him down.

Having handed over the reins as chief executive in November (the official line back then was that he wanted to focus on expanding the business beyond its consumer finance roots and pursue his own entrepreneurial interests), 44-year-old Damelin has now announced that he’s quitting his post as chairman.

The timing of his announcement is telling, coming just days before the new City regulator, the Financial Conduct Authority (FCA), prepares to impose tough rules on payday lenders.

The FCA will also be introducing a cap on the amount of interest that Wonga and other payday lenders are allowed to charge.

Damelin sees himself as a digital distruptor; what London-based Wonga needs now is a financial services heavyweight.

It will be interesting to see what Damelin, who retains a 5% share in the company with an estimated value of £50m, does next. He’s always talked about creating Britain's version of Facebook, Amazon and Apple, so we expect another tech startup – but in a less controversial space.

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