GT administrators find 40,000 Wonga compensation claims
Grant Thornton has identified four times as many Wonga compensation claimants as the official headcount of the numbers who had complaints open about the payday lender when it went into administration in August 2018
12 Mar 2019
The Financial Ombudsman Service (FOS) told the Treasury committee in January 2019 that at that point Wonga had ‘about 10,500’ consumers who were not then able to have their complaints against the lender addressed.
Grant Thornton are acting as administrators and the firm’s chief executive David Dunckley has now written to the Treasury committee stating that the ‘total number of redress claims is currently more than four times’ that estimate, meaning that over 40,000 people may be affected.
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.
In response to an earlier request from the committee about how the firm planned to handle outstanding complaints, Dunckley said the administrators will set up a portal for customers to make claims directly online, in a bid to speed up and streamline the claims assessment process, although there is currently no go-live date.
Dunckley wrote: ‘Whilst the administrators believe they will be able to notify creditors quickly as to whether their claims have been agreed or rejected in whole or in part, the agreed claims will not be notified of pence in the pound return until all recovery of assets has been made.
‘The administrators are progressing this as fast as possible; unfortunately there are a number of formal and legal processes they must go through before they can go live with the portal.’
The administrators have also advised customers that using a claims management company will not accelerate the claims process, and may expose them to charges that will be deducted from any final payment they might receive, and are working to ensure appropriate support for vulnerable customers.
Nicky Morgan, chair of the Treasury select committee, said: ‘This problem is clearly much bigger than expected. It now appears that over 40,000 people – and rising – may have an unresolved complaint about being mis-sold loans.
‘Wonga’s creditors and claimants are now in the hands of an administration process, waiting to discover what their share of Wonga’s assets will be, which could now be smaller as more people make claims.
‘This issue raises questions about whether the coverage of the Financial Services Compensation Scheme should be widened to provide protection for customers of high-cost short-term lenders and those of firms that later go bust.’
Report by Pat Sweet