Following an investigation by the OFT and FCA, payday lender Wonga has agreed to pay £2.6million in redress to customers to whom they sent debt collection letters by fake law firms. The tactic has been described as ‘unfair’ and ‘misleading’ by the FCA, and has affected 44,556 customers.
Under the names “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries”, Wonga demanded repayment on loans taken out, threatened further legal action and even added charges to customers’ accounts to cover the administration fees for sending the letters.
This practice took place between October 2008 and November 2010. Wonga have stated that they will now be identifying all of the customers who have been affected and will be contacting them directly via email and letter. The FCA has estimated that the compensation is likely to be paid from the end of July. Director of supervision at the FCA has commented:
“We are pleased that Wonga has been working with us to put matters right for its customers and to ensure that these historical practices are truly a thing of the past.”
“The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments.”
Wonga have issued an apology on their website, telling customers:
“Wonga was set up to meet the widespread demand for short-term finance and we are committed to serving you in a transparent, fair and responsible way.
However, it is clear that as we grew, we made mistakes along the way. We accept responsibility for our mistakes and we will learn from them.
We aim to deal with this issue as quickly and fairly as possible. We are working hard to do the right thing and earn back our customers’ trust”.
If you are struggling making repayments on payday loans, or are concerned about contact from your creditors, contact our advisers today.