Wonga customers will miss out on compensation for mis-sold payday loans

MPs in the Treasury Committee say borrowers have been “left to fend for themselves” and are calling on the Government to intervene.

It comes after Wonga went bust in August leaving around 10,500 complaints about the firm with the Financial Ombudsman Service.

When the borrower went under, the complaints body passed on the gripes to the administrator.

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They’ll be combined with around 24,000 complaints Wonga had received but failed to deal with before it collapsed – plus any more that have come in since.

Administrator, Grant Thornton, wouldn’t tell The Sun how many complaints it’s received since August, how much people are likely to get, and when they might find out more.

Sara Williams, who runs the Debt Camel blog and is an debt adviser at charity Citizens Advice, says compensation payouts from Wonga have typically been between £500 and £1,000 – although some could get a lot more.

The problem is that the Financial Services Compensation Scheme (FSCS), which protects cash up to £85,000 saved with a financial institution, won’t pay out because it doesn’t cover loans.

Are you due a payday loan refund?

Refund or compensation is often given where the loan was mis-sold or where affordability checks weren’t stringent enough. Here’s all you need to know:

  • Customers who’ve paid off payday loans debts can still claim. Even if you’ve 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’re still paying off payday loan debts you can still complain. You can complain if you’ve struggled to make repayments. If your complaint is successful it could lower the amount you owe.
  • You can still claim is the firm no longer exists. Big firms such as Wonga and QuidQuick no longer operate but that doesn’t mean you can’t get some money back. Customers can still make complaints about firms which no longer operate, although it is less likely that they will receive a refund as they will have to apply directly to administration firms. Although, if their complaint is successful and they still owe debts this could mean they have to pay back less so it’s still worth complaining.

This means borrowers have no option other than to become one of a long list of creditors owed money by the firm with no guarantee of getting their money back.

Nicky Morgan MP, chair of the Treasury Committee warns that struggling families have been left to “fend for themselves”.

She said: “It cannot be right that over 10,000 people who may have been mis-sold loans are just cast aside, especially as 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’ve been allowed to fall thought the cracks with nobody taking responsibility for their mistreatment.

“I have written to Grant Thornton, Wonga’s administrators, to understand how it intends to progress outstanding complaints against Wonga.

“If Wonga continues to damage people’s finances from beyond the grave, it may be time for the Government to intervene.”

The FCA won’t comment on the Treasury Committee’s calls, although its chief executive officer, Andrew Bailey, has said it is “not proportionate to extend FSCS cover to high-cost short-term lending activities”.

He added that bosses of payday loan firms have been warned to make sure that loans are affordable.

When Wonga went bust it said it couldn’t cope with demand for mis-selling compensation, which saw complaints about unaffordable loans rise threefold.

More than seven in 10 (72 per cent) people who took their complaint to the Financial Ombudsman Service had it upheld in their favour.

But it’s not too late to submit a claim to Wonga. Ms Williams said: “If you were given loans that you could only repay if you then borrowed again, those loans were unaffordable.

“Complaints don’t have to be detailed, just email the administrator at [email protected] and say you think you were mis-sold loans by Wonga. Compensation won’t be speedy but it’s easy to apply.”

The Sun has also contacted the Government for a response and we’ll update this story if we get one.

Here’s everything you need to know about Wonga, and what happened to debts and compensation claims after it went bust.

Wonga has been slammed in the past for harassing borrowers.

 



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