Harry Enfield’s character ‘Loads of Money’ may have fitted in well at the payday lender Wonga before they collapsed into Administration.
But now, according to a committee of MPs those who had previously borrowed from them and had subsequently applied to the Financial Ombudsman for compensation for mis-sold loans, have been “cast aside” by the Financial Ombudsman and have been left with little chance of redress against the failed lender.
Complaints had been lodged by borrowers on the basis that previous payday loans had been mis-sold to them due, in many cases, to their vulnerability and inability to repay and many arose following 2014 rules which tightened affordability criteria that payday lenders have to apply to prospective borrowers.
Those with genuine claims will now have to join the queue of creditors who may only receive a fraction of the value of their claim from the company once assets can be sold by the administrators.
Nicky Morgan, who chairs the Treasury Committee, said ..
“These people have been left to fend for themselves by Wonga, the Financial Conduct Authority (FCA) and the Financial Ombudsman Service. They have been allowed to fall through the cracks with nobody taking responsibility for their mistreatment …. If Wonga continues to damage people’s finances from beyond the grave, it may be time for the government to intervene.”
The FCA have said that as short-term lenders did not hold clients’ money or assets, that it would not be “proportionate” or affordable for the FSCS to cover this type of lender when they collapse as well.
The question remains as to how Grant Thornton, Wonga’s administrators will respond and then whether the Government will intervene.