Credit, collections & insolvency news
Wonga’s insolvency administrator Grant Thornton has said that complaints against failed lender Wonga rose to over 40,000.
The Financial Ombudsman Service (FOS) told the Treasury Committee in January 2019 that at the point that Wonga went into administration in August 2018, there were ‘about 10,500’ consumers who had complaints open about the payday lender but were unable to have their complaints resolved.
The Treasury Committee has published a letter from Dave Dunckley, Chief Executive of Grant Thornton, Wonga’s administrators, in which he states that the “total number of redress claims is currently more than four times” the FOS’ estimate, meaning that over 40,000 people may be affected.
Many of the complaints stem from Financial Conduct Authority (FCA) regulation introduced in 2014, which brought in affordability criteria to consumer credit activities. Those given loans that they were unable to afford can complain to the FOS to get their money back, including interest, charges and further compensation.
Nicky Morgan Chair of the Treasury select committee, wrote to Grant Thornton, Wonga’s administrators, last month to understand how they intend to progress outstanding complaints against Wonga. In his response, Dunckley also states that the administrators:
Commenting on the correspondence, Nicky Morgan, said “This problem is clearly much bigger than expected. It now appears that over 40,000 people – and rising – may have an unresolved complaint about being mis-sold loans.”
“Wonga’s creditors and claimants are now in the hands of an administration process, waiting to discover what their share of Wonga’s assets will be, which could now be smaller as more people make claims.”
“This issue raises questions about whether the coverage of the Financial Services Compensation Scheme should be widened to provide protection for customers of high-cost short-term lenders and those of firms that later go bust.”
“This issue raises questions about whether the coverage of the Financial Services Compensation Scheme should be widened.”
The FCA had capped interest charges in the payday lending sector to protect consumers, but this increased pressure on the business models of lenders, including Wonga.
Grant Thornton said it would set up an online portal for customers to make claims directly online, although gave no go-live date.
It advised customers to not use a claims management company, arguing this would not speed up the claims process and could result in fees being deducted from any payout.