The City of London Police has today said it will not carry out a criminal investigation into Wonga's debt collection practices after it was revealed last year that the payday lender used letters from bogus law firms to pressure customers into paying debts.

In June 2014, Wonga was ordered by the Financial Conduct Authority (FCA) to pay £2.6 million in compensation after it sent letters to around 45,000 customers in arrears under the names "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries" between October 2008 and November 2010.

The letters implied that the debts had been passed on to a third party or to an external law firm, but neither of the firms actually existed. It was discovered that Wonga had actually used the threat of legal action to pressure customers into making repayments, many of whom could simply not afford to pay the money back (see our Payday Loans guide for alternatives if you're struggling).

In some cases, customers were also charged "administration fees" for having the letters sent to them. The issue came to light following an investigation started by the Office of Fair Trading (OFT) in 2012 and concluded by the FCA in 2014.

As a result of the investigation, the FCA ordered Wonga to pay approximately £50 in compensation to each affected customer. The City of London Police (CoLP) agreed that it would be in the "interest of the public to review further material" to assess whether a criminal investigation would be appropriate.

However, in November, it also emerged that thousands of people who are in line for a payout are yet to receive their compensation offer from Wonga. About three-quarters of the 45,000 people impacted have received their compensation offers so far and the company expects that the remaining quarter will have received their offers by April this year.

'Insufficient evidence'

But CoLP has today confirmed that "after a thorough review of all the material gathered, it has concluded there is not sufficient evidence to progress a criminal investigation".

It says: "We found that the correspondence did not explicitly claim to be separate and distinct companies from Wonga and while not all the early versions contain a clear declaration, the majority have in the small print at the foot of the letters a statement identifying them as Wonga."

Jo Gornitzki, money and insurance editor at, says: "Wonga scared and intimidated vulnerable borrowers when they were least able to deal with it.

"It may have said somewhere in the small print that the letters were actually from Wonga, but the vast majority of respondents did not comprehend this information.

"We will be watching Wonga – and all payday lenders – carefully and we will come down on them like a tonne of bricks if we see anything similar in future."

The decision by the CoLP not to prosecute Wonga has no bearing on the compensation already paid to borrowers – its total bill for the payout ordered by the FCA was £2.6 million.

However, in a blog post from June last year, MoneySavingExpert editor and founder Martin Lewis calculated that if its own APRs were applied to the compensation it owed customers, Wonga would have to repay £34,334,929,158 to affected customers. Read his What Wonga should pay back blog for more info.

Martin Lewis
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It wasn't just Wonga

Following claims that it may not just have been Wonga that used sneaky tactics, asked users to email copies of any other letters received from fake lawyers chasing debts, whether for energy firms, banks or other payday lenders. We received the following:

In August, we sent all the letters we received that were misleading to the relevant regulators. We also called for explicit rules to be put in place to prevent firms from sending correspondence that purports to be from an external company when it's actually from an in-house team or another outfit owned by the creditor.

The FCA called for anyone with evidence of these practices to send letters into it. When we contacted the FCA today, it said it couldn't comment further whether it has opened an investigation into the practices used by all the firms.