The financial wellbeing of around 10,500 Wonga is continuing to be damaged “from beyond the grave”, according to MPs in the Treasury Committee.
Wonga collapsed into administration in August 2018, with the group of customers awaiting ombudsman rulings on whether they were mis-sold loans.
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 (FOS) to get their money back, including interest, charges and further compensation.
A surge in claims against the payday lender was blamed as a key factor in the company’s demise at the time of its collapse.
Lenders, and in particular members of the high-cost, short-term credit space, have warned of “claims farming” by claims management companies. Their contention is that companies are using industrialised processes to send thousands of bogus compensation claims into the FOS.
In a letter to FCA chief executive Andrew Bailey, Treasury Committee chair Nicky Morgan expressed concern that consumers, many of whom the committee believes are likely to be vulnerable, may be at “a significant financial disadvantage” as they are no longer eligible to claim through the FOS nor are eligible for compensation.
Morgan 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 FOS. They’ve been allowed to fall thought the cracks with nobody taking responsibility for their mistreatment.
“I have written to Grant Thornton, Wonga’s administrators, to understand how they intend to progress outstanding complaints against Wonga.
“If Wonga continues to damage people’s finances from beyond the grave, it may be time for the government to intervene.”