City watchdog FCA chose in 2016 to exclude short term credit firms like Wonga from the government's financial compensation scheme.

MPs are calling for government intervention as thousands of Wonga customers seeking compensation from the collapsed payday lender have been left in financial limbo because their cases fall outside of regulation.

Around 10,500 people had complaints open with the Financial Ombudsman Service (FOS) when the Wonga went bust last year. But MPs have been told by FOS chief ombudsman Caroline Wayman, that those customers will not be entitled to compensation or having their complaints resolved because high-cost short term credit firms like Wonga are not covered by the Financial Services Compensation Scheme (FSCS). Directed by the Financial Conduct Authority (FCA), Treasury select committee chair Nicky Morgan MP has contacted Wonga's administrator, Grant Thornton to address the customers' complaints and eventual compensation.

The FCA decided in 2016 to exclude high-cost short term credit companies from FSCS. Writing to Grant Thornton chief executive David Dunkley, Mrs Morgan said: "As some of these consumers are vulnerable, I would be interested to understand how you are dealing with the volume of complaints and how you are assessing their claims for compensation against Wonga?" She also asked how quickly the administrator was dealing with the complaints and how many had been assessed so far, requesting the company's response by March 7.

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