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Payday lenders: just when you thought they couldn’t get any more despicable

Simon Read

v2 wonga 300x118 Payday lenders: just when you thought they couldnt get any more despicableBritain’s most profitable payday lender Wonga has been forced to pay compensation of more than £2.6m to around 45,000 customers for unfair and misleading debt collection practices.

How unfair and misleading? It sent threatening letters from made-up law firms to 45,000 people who owed the firm money. Being in debt is not a happy state. And getting a letter headed “Chainey, D’Amato & Shannon” or “Barker and Lowe Legal Recoveries” mentioning legal action will do just one thing, make your situation seem much worse.

The pretend legal letters were designed to do one thing: scare customers, and that’s tantamount to bullying. To make things worse the high-cost credit company- which quotes an APR of 5853% – then added charges to cover it’s admin fees in some cases.

What’s been the reaction to the news? Clive Adamson, director of supervision at the Financial Conduct Authority, said: “Wonga’s misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears.”

Author and campaigner Carl Packman, who’s written a book about the payday lending industry: said: “The news shows that Wonga’s claims that they are different and responsible is a pure myth.”

Martin Lewis, founder of MoneySavingExpert.com said: “This just shows that while Wonga hires expensive marketing, PR and public affairs consultants to try to position itself as ‘the good guys in a bad industry’, it’s all a sham. Using lawyers as fake as its puppets, then having the stomach to charge people for it is a thuggish tactic, aimed at scaring and intimidating people who are already struggling.”

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.”

Richard Lloyd of Which? said: “It’s right the Financial Conduct Authority is taking a tougher line on irresponsible lending and it doesn’t get much more irresponsible than this. It’s a shocking new low for the payday industry that is already dogged by bad practice and Wonga deserves to have the book thrown at it.

What was the lender’s response? Tim Weller, interim Wonga chief executive, 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.”

Wonga also admitted that it miscalculated charges meaning almost 200,000 borrowers overpaid the company, although the majority by less than £5. Mr Weller added: “I would also like to apologise to customers affected by our system errors. We fully accept the impact on customers was negative in many cases.”

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  • zumbruk

    Of course, if these people had actually repaid the money they borrowed in the first place, they wouldn’t have had any problem, would they?

  • Dickybow

    Never mind compensation, if you defraud people, that’s a criminal offence and you do jail time don’t you?

  • jacktheladuk

    What about Bank of Scotland?; using a “solictors” called Blair, Oliver and Scott??

  • hayneman

    But will Cameron’s Cabinet of millionaires do anything about this? Of course not, especially while major Tory donor and advisor Adrian Beecroft remains a substantial Wonga shareholder…


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