Credit Cards & Loans
Wonga complainants may not receive redress
Last month, the UK’s biggest payday lender announced it had entered administration. The news came just days after reports suggested Wonga was on the ‘brink of collapse’ as it struggled to implement regulatory changes and because of historic compensation claims fuelled by claims management firms.
While outstanding complaints should be directed to the administrator, Grant Thornton, the Financial Ombudsman Service (FOS) which is also working on a number of cases, said there’s a chance existing customers with compensation claims may not get their money back.
A statement read: “Due to the nature of the business, there is no protection offered to consumers under the Financial Services Compensation Scheme (FSCS) in this instance. We are working with the administrators, Grant Thornton, to clarify the impact on the cases we have with us and whether we’ll be able to work on any new cases brought to us. We do not yet know what, if any, funds will be available to settle complaints.”
According to FOS data, there were 4,520 new complaints about Wonga, trading as WDFC UK Ltd, in the last six months. It upheld 72% of cases in favour of consumers. While compensation amounts aren’t reported, if a complaint is upheld in the consumer’s favour, it can ask lenders to refund interest, fees and charges (with standard 8% interest).
Grant Thornton said it will assess all complaints during the course of administration, so any customers who believe they’ve not been treated fairly or are owed some money, should submit their complaint.
However, it’s important to understand the administration process. The costs of realising assets will be paid first. Any amounts owing to secured creditors are then settled, followed by employee claims and unsecured claims (such as providers of goods and services and redress claims). If, after paying the costs and amounts due to the secured creditors, there are insufficient funds to pay all remaining claims in full then creditors will receive a proportion of their claim.
A statement read: “Given that the assets of WDFC UK Limited have yet to be sold and all claims reviewed, the Administrators cannot quantify the amounts which might be available to unsecured creditors or the timescale for such payments. However, the Administrators do encourage customers who feel that they are owed some money to contact Wonga to register their complaint so that the monies that are available to unsecured creditors can be fairly allocated to agreed claimants.”
Complaints can be emailed to: firstname.lastname@example.org