Hundreds of thousands of people who were mis-sold loans by Wonga look set to be left without the large majority of compensation they’re owed.
Wonga entered administration in August 2018 with around 400,000 people rightfully claiming since that they’d been mis-sold loans by the company.
Now those people are being informed by the administrators of Wonga’s affairs that they’ll receive only 4.3 per cent of the compensation they should really be entitled to.
Wonga was one of the most prominent payday lenders operating in the UK prior to its collapse but it came to be vilified for its practices and for the ways in which it made large sums of money from heavily indebted consumers.
The Financial Conduct Authority (FCA) began to clamp down on payday lenders like Wonga from 2014 onwards and introduced rules that meant they needed to pay more attention to who they were lending to and what the impacts of their products really were.
It subsequently became clear that Wonga was lending money to people who it knew were never likely to pay back the debts they were taking on.
There was also a clampdown on the scale of fees and the nature of charges that payday lenders like Wonga could levy against their customers, many of whom were finding themselves spiralling further and further into problem debt situations.
Around 380,000 eligible claims of mis-sold loans have been received by administrators since Wonga went out of business, with the average value of the claims being made worth around £1,200 and the total amounts involved being in the region of £460 million.
Claimants have been told that they will only be paid 4.3 per cent of the amounts they’re owed but they should at least receive the relevant monies within the next few weeks.
In addition to its lending practices, Wonga was penalised by the FCA in 2014 for what were deemed to be “unfair debt collection practices”.
The payday lender was found to have been sending misleading debt collection letters to some of its customers, threatening them with legal action via law firms that didn’t really exist.
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