Overcast

Overcast

max temp: 9°C

min temp: 5°C

ESTD 1874 Search

Finance: Wonga to pay £2.6m in compensation over ‘unfair’ debt collection tactics

12:45 25 June 2014

Online payday loans company Wonga is to pay compensation over unfair debt collection methods.

Online payday loans company Wonga is to pay compensation over unfair debt collection methods.

Payday lender Wonga is to pay more than £2.6million in compensation to around 45,000 customers for “unfair and misleading debt collection practices”, the City regulator has announced.

shares

The UK’s biggest payday lender was found to have sent letters to customers in arrears from non-existent law firms threatening legal action, the Financial Conduct Authority (FCA) said.

In some cases, Wonga added charges to customers’ accounts to cover administration fees for sending the letters.

Wonga apologised “unreservedly” for the failings, which took place between October 2008 and November 2010.

The FCA said consumers were put under “great pressure” from communications sent by fictitious law firms to make loan repayments that many could not afford.

Wonga contacted customers in arrears under the names Chainey, D’Amato & Shannon and Barker and Lowe Legal Recoveries, leading customers to believe that their outstanding debt had been passed to a law firm, or other third party. Further legal action was threatened if the debt was not repaid.

Neither of these firms existed and Wonga was using this tactic to maximise collections by piling the pressure on customers, the regulator said.

Tim Weller, interim Wonga CEO, 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.”

Mike O’Connor, chief executive of StepChange Debt Charity, said: “For too long payday lenders have subjected consumers to unfair, misleading and distressing practices and today’s announcement represents a victory for a small number of those consumers.

“It’s time the payday loan industry entered the 21st Century in terms of treating customers fairly. If they cannot, they should leave the market, or be pushed out of it.

“I hope this will be the first of many similar actions as the FCA continues its efforts to clean up the payday lending industry and create a short term credit market that meets consumers’ needs, but crucially treats those in financial difficulty fairly.”

shares

0 comments

Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files
Comments

Please log in to leave a comment and share your views with other East Anglian Daily Times visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by East Anglian Daily Times staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique East Anglian Daily Times account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

Mark Bee has pushed to ensure better broadband is brought to Suffolk.

Suffolk County Council leader Mark Bee last night insisted he wants to continue playing “an active role” in politics in Suffolk, as he announced he would quit his role next month.

Suffolk dialect road sign

“Howd yew hud, tergether!’’

Abellio Greater Anglia said train services between London Liverpool Street and Norwich are returning to normal but some services may still be cancelled.

Train services in Suffolk are returning to normal this morning after high winds caused widespread disruption yesterday.

Mark Bee and his deputy Lisa Chambers at Endeavour House in Ipswich after they saw off last year's challenge to their leadership.

Conservative councillor Mark Bee is to step down as leader of Suffolk County Council after four years in the role.

Voting isn't the only form of political engagement

The ideological machine that is meant to serve us has gone wrong and is tyrannising us, but that doesn’t mean we should boycott the ballot box

Suffolk has an ageing population - but can we cope?

Dramatic increases in the average age of people in Suffolk have been highlighted in a report which reveals that in some areas nearly one in 10 are expected to be aged 85 or over in the next two decades.

Damage to overhead wires between Diss and Stowmarket - photo courtesy of Greater Anglia

Rail users face an afternoon and evening of severe delays on routes between Norwich and London, after high winds caused damage to overhead power lines between Stowmarket and Diss.

There is the potential for sweeping changes at Braintree District Council come election day – though in practice that is unlikely to happen.

Firefighters were called to the house fire

Firefighters were called to a house fire in Stowmarket this afternoon.

A traffic collision has caused the delays in Halstead

Severe traffic delays in Halstead have been caused by a traffic collision.

Most read

Most commented

Topic pages