Number of Wonga compensation claimants 'four times the figure expected'
The number of redress claims made against failed payday loans firm Wonga is "more than four times" the initial estimate given by the Financial Ombudsman Service – meaning more than 40,000 people could be out of pocket.
In January, the Financial Ombudsman Service (FOS) told the Treasury Committee – a group of MPs that scrutinises Government policy – that when Wonga went into administration, there were "about 10,500" consumers who had complaints open about the payday lender.
But today, the committee has published a letter from Grant Thornton, Wonga's administrators, saying that the "total number of redress claims is currently more than four times" the FOS estimate.
What are the redress claims regarding?
Many of the complaints stem from a Financial Conduct Authority regulation introduced in 2014, which brought in new affordability criteria.
Those given loans they were unable to afford can complain to the FOS that their loans were mis-sold, and can try to get their money back, including interest, charges and further compensation.
How do you claim for a mis-sold loan?
Grant Thornton has said that customers with mis-selling claims should contact it. It's worth noting, you'll likely be dealt with as an 'unsecured creditor', and shouldn't expect to get much back, as there's a long list of people owed money when companies go into administration and customers are rarely anywhere near the top.
In its letter to the Treasury Committee, Grant Thornton states that the administrators will:
- Set up a page for customers to make claims online.
- Advise customers that using a claims management company won't speed up the claims process, and may leave them with a smaller payout.
- Work to ensure appropriate support for vulnerable customers.
What does the Treasury Committee say?
Treasury Committee chair Nicky Morgan MP 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."