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Payday lender Wonga must pay £2.6m in compensation after sending letters from non-existent law firms to customers in arrears.
The letters threatened legal action, but the law firms were false. In some cases Wonga added fees for these letters to customers' accounts. The City watchdog, the Financial Conduct Authority (FCA), said 45,000 customers would be compensated. Wonga has apologised and said the tactic ended nearly four years ago. The company is the UK's largest payday lender, making nearly four million loans to one million customers in 2012, latest figures show.
'Serious' misconductAn investigation found that Wonga sent letters to customers from fake law firms called "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries"......Read more here
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Wonga should be investigated by the Met Police for "dishonest activity" in sending letters from fake lawyers, the Law Society has said.
The Society - which represents solicitors in England and Wales - said the payday lender's actions could have amounted to blackmail and deception. Wonga sent letters from non-existent law firms to customers in arrears between 2008 and 2010. The call comes shortly after the City of London Police ruled out an inquiry. It said: "In March 2013 the Office of Fair Trading (OFT) met with the City of London Police to consider the case, with the view at the time being that the most appropriate course of action was for the OFT to continue to investigate as regulator focusing on but not limited to the Consumer Credit Act, Legal Services Act and unfair trading regulations." CompensationOn Wednesday, the Financial Conduct Authority (FCA) said that Wonga had agreed to pay £2.6m in compensation to about 45,000 customers - an average of about £50 each.....Read more here
Wonga sent letters from non-existent law firms to customers in arrears between 2008 and 2010, and has now agreed to pay compensation. On Friday, the City of London Police said it would reconsider opening a criminal investigation into the case. It is meeting staff from the Financial Conduct Authority (FCA). The event, at the FCA, is thought to be an initial, exploratory meeting and is unlikely to be followed by announcements on future action. City of London Police would not comment on the meeting or confirm that it was taking place.
'Reassessment'
Last week, the FCA said that Wonga had agreed to pay £2.6m in compensation to about 45,000 customers - an average of about £50 each. An investigation by the regulator found that Wonga sent letters to customers from fake law firms called "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries", sometimes charging customers a fee for these letters. The plan was to make customers in arrears believe that their outstanding debt had been passed to a law firm, with legal action threatened if the debt was not paid.....Read more here