APPROXIMATELY 10,500 clients of former high-cost credit lender Wonga could lose thousands of pounds in compensation for poorly sold payday loans.
Members of the Treasury Committee say borrowers have been “on their own” and call on the government to intervene.
it comes after Wonga went bankrupt in August leaving approximately 10,500 complaints about the company with the Financial Ombudsman Service.
When the borrower went bankrupt, the claims body forwarded the complaints to the administrator.
They will be combined with around 24,000 complaints that Wonga had received but did not deal with before he collapsed – not any that have come since.
Administrator Grant Thornton would not tell The Sun how many complaints he has received since August, how many people are likely to receive and when they could find out more.
Sara Williams, who runs the Camel Debt Blog and is a debt adviser at the Citizens Advice charity, claims compensation paid by Wonga is typically between £ 500 and £ 1,000 – although some may get much more.
The problem is that the Financial Services Compensation Scheme (FSCS), which protects cash up to £ 85,000 saved at a financial institution, will not pay because it does not cover loans.
Are you owed a payday loan repayment?
MILLIONS of payday loan customers can be repaid.
Repayment or compensation is often given when the loan has been mis-sold or when affordability checks were not strict enough. Here’s all you need to know:
- Customers who have paid off their payday loan debts can still claim. Even if you have paid off your debts, you may still be able to get a refund if you struggled to repay the money at the time.
- If you are still paying off your payday loan debts, you can still complain. You can complain if you had trouble paying back. If your complaint is successful, it could reduce the amount you owe.
- You can always pretend that the business no longer exists. Big companies like Wonga and QuidQuick don’t work anymore, but that doesn’t mean you can’t get the money back. Customers can still file complaints against businesses that are no longer functioning, although they are less likely to receive a refund as they will have to go directly to the administration companies. However, if their complaint is successful and they still have debts, it could mean that they have to repay less, so it’s still worth complaining.
This means borrowers have no choice but to be part of a long list of creditors to whom the business owes money with no guarantee of getting their money back.
MP Nicky Morgan, chairman of the Treasury Committee, warns struggling families have been left to “fend for themselves”.
She said: “It cannot be fair that over 10,000 people who may have been mis-sold are simply put aside, especially since many will be vulnerable consumers.
“These people have been left to fend for themselves by Wonga, the Financial Conduct Authority (FCA) and the Financial Ombudsman Service.
“They were allowed to fall through the cracks with no one taking responsibility for their mistreatment.
“I have written to Grant Thornton, the directors of Wonga, to understand how he intends to advance the outstanding complaints against Wonga.
“If Wonga continues to damage the finances of people beyond the grave, maybe it is time for the government to step in.
The FCA will not comment on Treasury Committee appeals, although its chief executive, Andrew Bailey, has said it was “not proportionate to extend FSCS coverage to high-cost short-term lending activities” .
He added that the bosses of the payday loan companies have been warned to make sure the loans are affordable.
When Wonga filed for bankruptcy, she said she couldn’t keep up with the mis-selling compensation claim, which saw complaints about unaffordable loans tripling.
More than seven in 10 (72%) people who lodged their complaint with the Financial Ombudsman Service received it in their favor.
But it is not too late to submit a claim to Wonga. Ms Williams said: “If you were given loans that you could only repay if you borrowed again, those loans were unaffordable.
“Complaints don’t need to be detailed, just email the administrator at [email protected] and say you think you have been mis-sold by Wonga. Compensation won’t be quick. but it’s easy to apply. “
A spokesperson for Grant Thornton added: “We are aware of the Treasury Committee letter sent to our Managing Director on February 25, 2019 and will formally respond to the Committee within the requested time frame.
“The directors continue to carry out an orderly liquidation of the business in accordance with their legal obligations, supporting clients to the extent possible during this period, and developing a methodology to deal with claims in a fair and reasonable manner in the circumstances of administration.
“Our goal is to process claims fairly and efficiently, and to maximize the assets we receive in order to best compensate creditors, including claimants.
“We monitor clients who may be vulnerable (including financial hardship, financial hardship, health and wellness) and strive to ensure appropriate support for these individuals. “
The Sun has also reached out to the government for a response and we’ll update this story if we get one.
Wonga was slammed in the past for harassing borrowers.
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