MPís are continuing to hear that Payday lender Wonga have kept thousands of entitled customers waiting for their compensation.
After being left in arrears on their loans, some 45,000 customers were contacted by non-existent law firms; and are now entitled to a share of £2.6 million.
Thus far only 27,000 customers have been contacted, so claims Wongaís chief credit officer Nick Brookes.
His excuse: customersí details had since changed and they were ìdifficultî to contact.
The FCA (Financial Conduct Authority) investigated and found that Wonga had sent letters to customers by means of fictitious law firms such as ìBarker and Lowe Legal Recoveriesî and ìChainey, DíAmato & Shannonî.
Wongaís objective seems clear at this point: create the illusion in the eyes of the customers in arrears that their outstanding debt had been passed onto a law firm, and that they would face legal action if they failed to pay. But nothing could be further from the truth.
In the aftermath, Wonga have said that they stopped this tactic four years prior, and in June promised to pay compensation to the victims.
For this compensation to occur however requires that the customers accept an offer of compensation made by letter from Wonga. But thus far, Wonga have only received 5000 responses, with 99% of those having accepted the offer of compensation.
The chief executive of the Money Advice Trust, Joanna Elson said:
“The fact that so many customers are yet to respond to the letters that Wonga have sent out is a concern – you have to wonder how many of these envelopes have gone unopened.
“Given that many of those affected have been in financial difficulty and chased for payments in the past, it is understandable they may be nervous when another letter lands on their doorstep.”
Mr Brookes has explained to MPís that both Wonga and the payday industry in general is currently at a ìcrossroadî and undergoing a lot of changes. However he also stated that Wonga was only halfway done with its changes.
Mr Brookes also went on the say that 330,000 customers are in the process of having their debts written off due to inadequacies in the initial affordability checks.
The new checks mean that some customers are now allowed a ìcooling off periodî in the even that they had struggled to repay previous payday loans.
Stricter checks involve comparing the amount being borrowed to the income of the borrower. Previously, applications would generally take between five and fifteen minutes, and would be completed online, with a decision often being made in an instant as to whether or not to approve the loan application.
As these important changes are being made, Wonga have promised to remove the nodding puppets from their advertisements.