Number of Wonga compensation claimants ‘four times higher’ than expected
More than 40,000 Wonga customers had complaints open with the Financial Ombudsman Service (FOS) at the time the payday lender collapsed – four times more than previously thought.
The FOS told MPs in January that “about 10,500” consumers had complaints open about the payday lender but were unable to have their complaints resolved.
But today the Treasury Committee 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 an affordability criteria to consumer credit activities.
Those given loans that they were unable to afford were told they could complain to the FOS to get their money back, including interest, charges and further compensation.
However, when Wonga went bust these customers were told the ombudsman would not deal with their complaints and they wouldn’t get compensation because high cost short-term credit firms are not covered by the Financial Services Compensation Scheme (FSCS).
Morgan wrote to Grant Thornton, Wonga’s administrators, last month to understand how they intend to progress outstanding complaints against Wonga. In his response, Mr Dunckley said that the administrators:
• Will set up a portal for customers to make claims directly online, although there is currently no go-live date
• Advised customers that using a claims management company won’t accelerate the claims process, and may expose them to charges that will be deducted from any final payment they might receive
• Are working to ensure appropriate support for vulnerable customers
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.”