Call for Grant Thornton to support Wonga consumer claims
27 Feb 2019
MPs have challenged Grant Thornton, the administrators to failed pay-day loan company Wonga, about how they plan to support vulnerable customers who had complaints open with the Financial Ombudsman Service (FOS) at the time of the lender's collapse, and who they say have no other route to redress and have been ‘cast aside’
27 Feb 2019
A Treasury committee inquiry into the operation of Financial Ombudsman Service has heard evidence that when Wonga went into administration in August 2018, the 10,500 consumers who had complaints open about the payday lender with the Financial Ombudsman Service were unable to have their complaints resolved.
Many of the complaints stem from Financial Conduct Authority (FCA) regulation introduced in 2014, which brought in an affordability criteria to consumer credit activities. Those given loans that they were unable to afford can complain to the Financial Ombudsman Service to get their money back, including interest, charges and further compensation.
They are also not entitled to any compensation because high cost short-term credit firms are not covered by the Financial Services Compensation Scheme (FSCS).
Nicky Morgan, chair of the Treasury committee, 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 FCA and the Financial Ombudsman Service. They have been allowed to fall thought the cracks with nobody taking responsibility for their mistreatment.’
Morgan raised the issue with FCA chief executive Andrew Bailey, who replied by stating that consumers would be able to take action via the administrators as part of the insolvency process.
The Treasury committee chair has now written to David Dunckley, Grant Thornton’s chief executive, saying: ‘As some of these consumers will be vulnerable, I would be interested to understand how you are dealing with the volume of complaints and how you are assessing their claims for compensation against Wonga?
‘I would be equally interested in how you are ensuring good service to those with vulnerabilities?
‘For example, how quickly you are dealing with consumer complaints and how many complaints you have already assessed? In addition, what is the current uphold rate on those complaints and what is the average compensation amount awarded?’
Grant Thornton has been asked to provide a response by 7 March 2019.
Report by Pat Sweet