Wonga customers to get just 4% of compensation owed
Administrator Grant Thornton UK LLP confirmed it has begun sending correspondence to all unsecured creditors, including 358,129 eligible redress claimants.
It will pay a final dividend of £23m, representing 4.3p in the £1 on agreed creditor claims totalling £535m. Payments were expected to be made by the end of January but the administrator confirmed they will be made in the next four weeks.
A spokesperson said: “The final dividend payment, amounting to 4.3% of agreed claims against the Wonga estate, will be made over the coming weeks via bank transfer or cheque.
“As the joint administrators have explained throughout the course of the administration, the final dividend payment is significantly smaller than accepted claim values, owing to the fact that the total value of all accepted claims significantly exceeded the money available to be shared out.”
Wonga customers failed
Wonga customers have criticised the measly payments. One said: “I just got my email and they said I’m owed about £1,200 but I’m only going to get £48. That’s an absolute disgrace.”
Another customer posted on Debt Camel: “Had my email from Wonga today very disappointing. Was a pay-out of £7,010 and only getting £302. Totally disgusting, glad they no long exist.”
The UK’s largest payday lender, Wonga Group Limited, entered administration in August 2018 and an estimated 200,000 customers had outstanding loans.
However, around 400,000 borrowers were eligible for redress as a result of mis-sold and unaffordable loans dating back to 2007, according to Debt Camel.
Sara Williams, founder of Debt Camel, said: “Many people will have been hoping for more than 4.3% and are very upset. It is not the administrators’ fault there is so little money to be divided between so many people.
“It is the fault of the regulators that they allowed Wonga to break the rules saying that affordability should be checked. And now they have failed to ensure that these Wonga victims get the compensation they should have.”
Due to the nature of high cost short-term credit, firms are not covered by the Financial Services Compensation Scheme (FSCS).
In 2014, Wonga was forced to write off interest and charges for 45,000 customers costing it £2.6m. And 330,000 customers had their balance entirely written off.
In 2016, it reported a decline in revenues from £217.2m in 2015 to £77.3m in the year to December 2015 and posted a pre-tax loss of £80.2m as it underwent a “transformation to treat customers fairly by using affordability assessments”.