The Wonga Administrators’ six month progress report to end February 2019 was emailed to creditors on 27 March 2019.
The creditors include the so-called “redress creditors”. These are the customers who complained to Wonga saying they were given unaffordable payday loans.
Collecting outstanding loans
When Wonga went into administration, the Gross Loan Book totalled £77 million. So far the Administrators have collected c£21 million.
When Wonga went into administration, c£56million of their Loan Book was considered to be in arrears and therefore less likely to be collected. So the Administrators have effectively collected the easy part of the outstanding balances.
The Administrators are exploring what the outstanding loans could possibly be sold for and have had enquiries from “a number of parties” about buying the remaining debts.
Number of affordability complaints
The Administrators have c 49,000 potential Redress Claims for unaffordable lending so far. 32,000 of these were submitted by Claims Management Companies.
Wonga had c.24,000 complaints at the time it went under, including those with the Financial Ombudsman that have now been returned to the Administrators. Since then a further 25,000 complaints have been received;
The Administrators are developing an online claims portal to enable further affordability complaints to be submitted. UPDATE this went live on 11 April.
The Administrators say that Wonga had lent to c 2 million people in the UK. They will be contacting all these customers by email to invite them to make a Claim via the portal and will also have an advertising campaign.
They expect significantly more complaints will be received.
A couple of weeks ago I said that I wouldn’t be surprised if the eventual number of people submitting affordability complaints to the Administrators is more than 100,000. That still seems likely to me.
An automated tool to decide the affordability complaints
The Administrators have developed an automated tool to determine which complaints will be upheld.
- how large a loan is compared to the customer’s reported income;
- the length of borrowing and number of loans, to identify repeat borrowing without a significant break; and
- any payments in arrears or customer reports of hardship.
The tool will take account of the right of set-off where a customer has an outstanding balance.
It will include looking at loans that are over 6 years old. In most administrations, the standard 6 years rule from the Limitation Act (1980) would be applied. But the FCA’s DISP rules let FOS look at complaints that are brought within 3 years of the customer becoming aware of there right to complain. In September 2018 the Financial Ombudsman published two decisions on over 6 year payday loans, deciding it can look at them and the Administrators have decided to follow these decisions.
The Administrators are proposing that anyone who is dissatisfied with the result can submit further evidence for a manual review of their complaint.
Overall this seems like a sensible way forward to me. As the Administrators described in October 2018, an automated tool is essential, otherwise the cost of determining the complaints would mean no money was left to pay those complaints. It is good there will be a manual review process and that they are looking at loans over 6 years old.
How much money will there be & how long will it take
There will not be enough money to pay these complaints in full.
The Administrators are selling the Polish and South African subsidiaries. A sale of the Spanish subsidiary has been unsuccessful.
The Administrators have decided not to sell the customer database after taking legal advice. That is very good news. Many payday loan borrowers may be vulnerable and their details should not be sold to firms looking to exploit this.
As previously advised it is expected it will take more than the normal 12 months allowed to complete the administration so the Administrators will be applying to the court for an extension of another 12 months.
The next report from the Administrators is expected to be on 27 September, in 6 months time.
If you haven’t yet submitted a complaint
If you were given loans by Wonga which were unaffordable, so you could only repay them by borrowing again, you can still submit a complaint.
At the moment you can do this by sending a brief email to firstname.lastname@example.org. Just say you think you were given unaffordable loans and give your name, address etc so Wonga can identify your account. Or you can wait until the online portal goes live in April and use that.
Do NOT go via a Claims Company. All they will do is pass your name and address on to Wonga’s Administrators and take a large cut of your payout for doing this.