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WONGA ordered to pay £2.6m Compensation for misleading Debt Collection Practices


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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, said 45,000 customers would be compensated.

 

Wonga has apologised and said the tactic ended four years ago.

 

An investigation found that Wonga sent letters to customers from fake law firms called "Chainey, D'Amato & Shannon" and "Barker and Lowe Legal Recoveries".

 

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.

 

"Wonga's misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears," said Clive Adamson, director of supervision at the FCA.

 

 

 

 

Will be interesting to see if they give this money to the customer or take it off their debts ?

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http://www.fca.org.uk/your-fca/documents/requirement-notices/wonga-group-limited-vreq

 

Voluntary Application for Imposition of Requirement: Wonga Group Limited

 

2. Requirement

2.1. Wonga is required to conduct a consumer redress scheme whereby it determines whether the unfair debt collection practices described in paragraph 1.1 above caused detriment, loss or damage to relevant customers (whether its own customers or those of its group companies).

 

2.2. Wonga is required to conduct a consumer redress scheme whereby it determines whether the unintentional systems errors described in paragraph 1.2 above caused detriment, loss or damage to relevant customers (whether its own customers or those of its group companies).

 

2.3. To the extent that Wonga establishes that customers have suffered detriment, loss or damage through the exercise described in paragraphs 2.1 and 2.2 above Wonga must then determine what the redress should be and pay the redress to affected customers.

So it's left up to Wonga to decide which customers are affected and what the compensation should be.
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Important customer announcement – We are sorry

 

Dear Wonga customers,

 

We are issuing a public apology following an announcement by the Financial Conduct Authority regarding the following two issues.

 

Historical debt collection issues

Between 2008 and 2010, we sent out letters to 44,556 customers claiming to be from companies “Barker & Lowe” and “Chainey, D’Amato & Shannon”. These letters were in fact from Wonga. They gave the misleading impression that customers’ outstanding debts had been passed on to a law firm (or other third party) with the threat of adverse consequences if the debts were not repaid quickly. Charges were added to some customer accounts as a result of this practice.

 

This practice was unacceptable and should never have happened. It ran contrary to the principle of transparency on which our business has been built.

System errors

Following an internal investigation we have also identified certain system errors, which resulted in the miscalculation of some customers’ balances. Some customers overpaid Wonga whilst a greater number underpaid, with the majority of those customers who overpaid Wonga, overpaying by less than £5.

 

All known balance calculation issues have been addressed. For existing customers, where they have overpaid Wonga this will be repaid with interest and those who underpaid Wonga will not be asked to pay the shortfall.

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This is not unique to Wonga. Hope the FCA will start looking at other DCA's !

 

Using this example, perhaps CAG should encourage people to bombard the FCA with complaints about unfair practice by DCA's.

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Suuure. They say its happened 4 years ago.. Do they really think people would just ignore it. Its the fact that it happened and they thought they could get away with it.

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Thats around 50 something quid isnt it? Per person?

 

One thing that i dont like is what the FCA have done. They said they wont perform a criminal investigation because they want to get compensation going. I'm pretty sure all the borrowers would be willing to wait a while for their compo if it means wonga got closed down or had heavy restrictions placed on them. After all, fraud and attempting to obtain money by deception are criminal offences.

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Why every website reporting this calling it a fine. They haven't been fined a single penny.

 

The letters were sent between 2008 an 2010, Wonga informed the OFT in Jan 2011, who finally censured them in May 2012, and just threatened Wonga with a £50,000 fine if they did it again.

 

Why has it taken over 3 years for any real action to be taken?

 

As this happened before the FCA took over the regulation of payday lenders, it is unable to fine Wonga. It also said there would be no criminal investigation as it wanted to set up a compensation scheme as quickly as possible and a criminal probe would take time.

 

Yet another missed opportunity.

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I've been asked to post this message

 

Sky News are looking to talk to anyone who has been affected by the fake lawyer letters sent out by Wonga under the names “Chainey, D’Amato and Shannon” and “Barker and Lowe Legal Recoveries”, which have turned out not to exist.

 

If you believe you are entitled to compensation, Sky News would like to speak to you for a brief interview.

 

Please get in contact via [email protected]. Thank you!

 

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I wonder if they will refund me directly, thing is I have moved house and no longer have the same bank account, I think also there is enough evidence of their wrongdoing towards myself posted on this forum that would prove conclusive that I am entitled to this refund, but of course I suspect they will do the same as the banks/mortgage companies and take the money from the alleged debt - as well as use it as an excuse to mass market c'customers' again.

 

Pity the FCA can't hammer another DCA (Name begins with M and again features on here chasing alleged PDL debt)

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No mention of how they will pay the compensation or how much ? and do they even know who they sent these debt collection letter to ?

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I wonder if they will refund me directly, thing is I have moved house and no longer have the same bank account, I think also there is enough evidence of their wrongdoing towards myself posted on this forum that would prove conclusive that I am entitled to this refund, but of course I suspect they will do the same as the banks/mortgage companies and take the money from the alleged debt - as well as use it as an excuse to mass market c'customers' again.

 

Pity the FCA can't hammer another DCA (Name begins with M and again features on here chasing alleged PDL debt)

 

 

If you mean Motormile - they are attempting to collect Wonga debts, so they should be stopped in the meantime while Wonga work out who is entitled to compensation

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The email they are sending out to the affected Customers:

 

Dear XXX

 

As you may have already read or heard in the press, following an announcement by the Financial Conduct Authority we have today issued a public apology. We have identified the customer group affected by a historical debt collection issue.

 

We can confirm that you have been affected by this debt collection issue. Please read this email carefully. We will be in contact with you directly by letter to advise you of the compensation due to you.

 

Debt collection issue

 

Between 2008 and 2010, we sent out letters to 44,556 customers claiming to be from companies "Barker & Lowe" and "Chainey, D'Amato & Shannon". These letters were in fact from Wonga. They gave the misleading impression that customers' outstanding debts had been passed on to a law firm (or other third party) with the threat of adverse consequences if the debts were not repaid quickly. Charges were added to some customer accounts as a result of this practice.

 

Our apology

 

We unreservedly apologise to you. This practice was unacceptable and should never have happened. It ran contrary to the principle of transparency on which our business has been built.

 

We are working with the Financial Conduct Authority, our regulator, to agree a redress programme which will ensure customers are appropriately compensated. We accept responsibility for our mistakes and we will learn from them.

 

We know your debt has been transferred to another company. However Wonga will be handling all elements of the redress process. Please direct any queries to Wonga and not the company who took over ownership of your debt.

 

System errors

 

Following an internal investigation we have also identified certain system errors, which resulted in the miscalculation of some customers' balances. Some customers overpaid Wonga whilst a greater number underpaid, with the majority of those customers who overpaid Wonga, overpaying by less than £5.

 

All known balance calculation issues have been addressed. For existing customers, where they have overpaid Wonga this will be repaid with interest and those who underpaid Wonga will not be asked to pay the shortfall.

 

We are in the process of identifying the customers who have been affected by these system errors. We will be in touch directly with all customers who have experienced financial loss as a result of these errors.

 

 

Key Facts

for customers

 

We know you have been affected by the debt collection issue and will be sending you a letter in the next 8 weeks

 

We are in the process of identifying the customers who have been affected by certain system errors and we will be in touch directly if you have been affected and experienced financial loss as a result

 

If you are identified as being affected by both issues, please expect to receive two letters as we will respond to both issues individually

 

We are unreservedly apologising for some previous unacceptable practices

 

We are working with the FCA to agree our approach to compensation

 

Please click here wonga.com/apology

for further information

 

Confirm we have the most up-to-date contact details for you

Next steps:

 

In order for us to resolve these matters quickly and efficiently we need you to confirm that we hold the most up-to-date contact details for you.

Please click here wonga.com/apology and follow the 'Check or update your contact details' button

This will only take a few moments and the information you supply will only be used for compensation purposes

We aim to have contacted all affected customers within 8 weeks of the original announcement (25 June 2014)

We aim to deal with this issue as quickly and fairly as possible and we are working hard to do the right thing and earn back your trust.

 

Yours,

 

Tim Weller

Interim CEO, Wonga Group

 

We know you have been affected by the debt collection issue and will be sending you a letter in the next 8 weeks

 

We are in the process of identifying the customers who have been affected by certain system errors and we will be in touch directly if you have been affected and experienced financial loss as a result

 

If you are identified as being affected by both issues, please expect to receive two letters as we will respond to both issues individually

 

We are unreservedly apologising for some previous unacceptable practices

 

We are working with the FCA to agree our approach to compensation

 

Please click here wonga.com/apology

for further information

 

Confirm we have the most up-to-date contact details for you

 

To be honest I'd happily give up my compensation if in return the entire Management of every PDL was locked up in prison.

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Love how they call it an issue when infact it was borderline criminal. Even the fca suggested as much. They should have held off conp and started that investigation. As it stands wonga have got off very lightly yet again.

Any advice i give is my own and is based solely on personal experience. If in any doubt about a situation , please contact a certified legal representative or debt counsellor..

 

 

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I am still duboius that Wonga won't take the proverbial here and restart the clock ticking on alleged debts that are nearly statute barred.... I am not comfortable about logging into their 'secure site' and giving them my updated address/bank details.

 

I think the FCA should have the role here of repaying customers wronged by Wonga, without any detriment to the customers credit rating.

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Yes Ell-enn, I do mean Motormile, they are a party to this 'fraud and abuse' of customers as much as Wonga are (and I use those words in the same way they use them when describing 'delinquent distressed debtors').

 

The FCA should have also asked Wonga to retract every record it has placed with the Credit Reference Agencies for that period for each customer too.... not just place a 'Notice of Correction' on the affected customers accounts either.

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What a country, a financial organisation commits Fraud on a massive scale, they are ordered to pay compensation. An individual commits fraud on a small scale and he goes to prison!

Coulson gets tried and convicted of phone hacking.....GCHQ call phone hacking necessary for security.

Individuals get hounded to the ends of the earth for a few hundred in outstanding tax, Vodaphone get off with millions.

 

Classless society indeed

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I have received an email from Wonga today titled, "WE ARE SORRY" and goes on to say that my account was affected by internal debt collection issues and there were system errors. Apparently, they have been sending out phoney law firm letters. I will wait with bated breath to see what my letter says when it is receive with news of any "historical payment issues"! This applies to persons who dealt with them between 2008 and 2010! :mad2:

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No mention of this yet on the Daily Wail website.....

 

I'm having fun with the HMRC, taking over 3 weeks to get a payment to me, so I have already told them I will take them to court the same way they would hound me - they offered to 'cancel the cheque and reissue it but it would take a further 6 to 8 weeks to get to me' - I said 'don't forget the further two weeks it takes to clear through the banking system'...

 

This country needs a complete change of government and money put into the right places, instead of overseas aid and 'green' issues - my 'green' issue is the less red tape and rules there are in legislation the less room people have to 'commit fraud and abuse',

 

Wonga need to be stopped from doing any business for 6 months to sort this current mess out, before another 'customer centred error' comes to light.

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You're right SG. MMF are happily updating (or originating) default markers on accounts they are collecting for Wonga (or has Wonga sold them to MMF ? I can't remember).

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