Payday lender Wonga has been forced to issue a snivelling apology after being whacked by a £2.6m compensation order for sending letters from fake law firms to customers who were in arrears.
The letters, which threatened legal action, came from fake law firms called “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries” and also slapped added fees onto customers’ accounts.
The letters were designed to hoodwink customers in arrears that their outstanding debt had been passed to a law firm, with legal action threatened if the debt was not paid.
The Financial Conduct Authority (FCA) said 45,000 customers would now be compensated. Issuing a full apology Wonga claimed the strategy was ditched nearly four years ago.
Wonga interim chief executive Tim Weller said: “We would like to apologise unreservedly to anyone affected by the historical debt collection activity and for any distress caused as a result. The practice was unacceptable and we voluntarily ceased it nearly four years ago.”
FCA director of supervision Clive Adamson said: “Wonga’s misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears. The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments.”
However, as the strategy was axed before the FCA took over the regulation of payday lenders, it is unable to fine Wonga. Instead, the payday giant will start contacting customers in July to offer compensation, with money likely to be paid by the end of the month. This will either be paid in cash or customers will have their outstanding debt reduced.
MPs: Ban payday ads on kids TV
Payday chiefs defiant in MP probe
New payday loan rules but no ad ban
Payday ad ban to cost industry £36m
Ad body blasts payday loans ban
‘God’ takes on payday loans
Cash Lady axes bankrupt Catona
Payday firms face outright ad ban
Katona back in new Cash Lady ad
Cash Lady ‘easy money’ ad slated
Payday loans ‘piling on agony’
Call for realtime credit database
Payday firms face ad clampdown
ASA blasts Pounds to Pocket ad
Wonga targets online shoppers
Payday loan firms face OFT probe
To leave a comment please register – it takes less than a minute and is free of charge. You will also get our weekly email update The DM Report (to opt out contact email@example.com). If you are an existing user, please log in. If you have forgotten your log-in details please email firstname.lastname@example.org to get them reset!