There are about 200,000 people with current loans from Wonga – many of them may have a good case for the interest to be removed from their balance so they only repay what they borrowed.
Wonga announced on 30 August that went into administration.
After three weeks, the public announcements from Wonga’s administrators, the FCA and the Finanical Ombudsman Are still not very detailed about how complaints and requests for refunds will be handled.
I will be keeping this page updated. Check out the comments at the bottom where readers may report on what is happening to their complaints and refunds.
The administrators said on 11 September [my bold]:
As part of their statutory obligations, the Administrators will assess all complaints during the course of the administration so it is important that customers who believe that they have been treated unfairly and are owed some money, submit their complaint. Customers can submit complaints in the first instance by email to email@example.com. … Customers whose complaints are upheld will then become unsecured creditors of WDFC UK Limited (in administration).
Given that the assets of WDFC UK Limited have yet to be sold and all claims reviewed, the Administrators cannot quantify the amounts which might be available to unsecured creditors or the timescale for such payments. However, the Administrators do encourage customers who feel that they are owed some money to contact Wonga using the above email address to register their complaint so that the monies that are available to unsecured creditors can be fairly allocated to agreed claimants.
The FCA has said:
The FCA will continue to supervise Wonga once it is in administration and is in close contact with the proposed administrators with regard to the fair treatment of customers.
The administrators have confirmed that customers won’t be able to get help from the FSCS. This was expected, see Why the FSCS does not cover payday lenders for details.
The Financial Ombudsman updated its statement on 13 September to say:
We are working with the administrators, Grant Thornton, to clarify the impact on the cases we have with us and whether we’ll be able to work any new cases brought to us. We do not yet know what, if any, funds will be available to settle complaints.
How will this affect customer’s loans and refunds?
Customers who have already had refunds agreed
All agreed refunds will be treated as unsecured creditors, whether the amount was agreed directly with Wonga or through the Ombudsman. This will covers refunds that were agreed before administration started and those that are agreed during administration.
Administrators have a legal obligation to pay certain creditors first. This includes their own fees, employee wages and secured creditors. It is likely that some of Wonga’s backers will be secured creditors which will reduce the money available for refunds.
Until these are paid, it isn’t known how much money will be left to be divided between the unsecured creditors. It is very unlikely there will be enough to pay all the refunds in full, so people will get a percentage of it.
Although there is a hold on any payments being many, one reader has had his credit record corrected during this waiting period, so this is worth asking Wonga for.
Customers with complaints already at the Ombudsman
The administrators say:
The Administrators are working closely with the FOS in respect of the complaints they are currently managing. If your complaint has already been submitted to the FOS then no further action is required at this stage.
So that doesn’t say very much at all.
Customers with complaints currently with Wonga
The administrators will assess these complaints.
At the moment it seems that lists of loans are being sent out where people have asked for them but no decisions on refunds are currently being issued.
So complaints are reaching the 8 week point without receiving a response from Wonga. Although these complaints can be sent to the Ombudsman at the 8 week point, there is no indication about whether the Ombudsman will be able to consider them.
Haven’t yet asked for a refund?
You may feel you have found out about this too late and now it isn’t worth bothering because you won’t get any money.
But it is quick to put in a complaint and it will be considered. The administrators are encouraging you to do this, saying in this page on Redress Claims that:
If you have a complaint about being mis-sold a loan and believe you are owed some money then you should make a complaint as you might be entitled to claim a refund…
The Administrators are in the process of considering how to identify and notify all of those who may have a complaint and of their ability to submit a claim…
If you would like to make a complaint now, and have not received any communications from Wonga, the Administrators would encourage you to contact Wonga…
Even if the administrators run out of money for paying out refunds, if you have an existing balance that you owe to Wonga, that balance may be reduced by having the interest removed so you only repay what you borrowed or it may be wiped out if you had previous loans from Wonga that were also unaffordable.
I suggest you send an email to firstname.lastname@example.org with AFFORDABILITY COMPLAINT as the title. Keep this short:
- give your name, address, and customer number if you know it. Also give the email address at the time you borrowed if this has changed. If you don’t know your customer number, give your date of birth.
- say that you were given unaffordable loans(s) and that if Wonga has looked at your credit record and your borrowing history from them, they should not have given these loans.
- attach a copy of your current Noddle credit report – you can get it online and its free.
- say you are happy to provide more information if they would like.
Do not use a claims company – they will not do any more than send the email I have just suggested, but they will want a large amount of your refund!
Customers with existing loans
Even though Wonga is no longer in business, your loan still exists. It is not going to vanish or be written off.
If you can repay it without hardship and without borrowing from another lender, this is the best option for you.
“Being able to repay without hardship and without borrowing elsewhere” is the definition of whether the loan is affordable for you.
If you have been given an unaffordable loan, put in a complaint, see Haven’t yet asked for a refund? above.
Customers with existing loans who complain will actually be in a better position to get a refund from the administrators, see Wonga customers and the right of set-off, because their refund will be used to reduce or wipe out the balance they owe,
If you have a lot of other debt problems, this may be a good time to talk to StepChange about setting up a DMP or your other options.