On 30 August, Wonga stopped lending and went into administration. At that date:
- there were over 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;
- there were 24,000 affordability complaints awaiting a decision by Wonga and 9,500 complaints against Wonga with the Financial Ombudsman.
- since then an extra 200-500 claims a day have been received by the administrators.
This page looks at how these complaints will be handled and when refunds may be paid.
I keep this page updated. Check out the comments at the bottom where readers report on what is happening to their complaints and refunds.
Public announcements about complaints
The administrators said on 11 September:
the Administrators will assess all complaints during the course of the administration … 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… to register their complaint so that the monies that are available to unsecured creditors can be fairly allocated to agreed claimants.
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.
On 26 October the Financial Ombudsman said:
we won’t be able to progress any complaints about Wonga any further, or work any new cases brought to us. As a result, we’ll be transferring complaints about Wonga to Grant Thornton as the administrators. We’ll be writing to individual consumers to explain this and to let them know that they don’t need to do anything further at this stage and that Grant Thornton will get in touch directly.
The Administrators’ Proposals – now accepted
On 24 October, the Administrators sent their Proposals, detailing how they planned to handle the administration, including customer complaints, and a Voting Form to creditors, including some customers who had already had a Wonga refund agreed, but not paid.
These Proposals were accepted in the vote by creditors. It doesn’t matter if you didn’t get that letter, you don’t need to do anything at the moment.
How the administrators plan to handle complaints and pay refunds
The Administrators will be developing an automated tool to assess complaints that is in line with the approach the Ombudsman currently uses. Further details will be given later. This will decide if a refund is due and if so, how much.
Administrators have a legal obligation to pay certain creditors first. This includes their own fees, employee wages and secured creditors.
Until these are paid, it isn’t known how much money will be left to be divided between the people who should have refunds and any other unsecured creditors.
There will not be enough to pay the refunds in full, so people will get a percentage of it. This is often described as getting so many pence in the pound back eg “getting 20p in the pound”. At the moment we have no idea what percentage will be paid. this will depend on things such as how much Wonga’s foreign operations can be sold for and how many people are due a refund.
I have looked at the Proposals in detail in How the Wonga administrators will handle complaints & refunds.
Customers who have already had refunds agreed
All agreed refunds will be treated as unsecured creditors. This will include refunds that were agreed with Wonga before administration started and those that are later determined by the administrators.
Although there is a hold on any payments being made, one reader has had his credit record corrected during this waiting period, so this is worth asking Wonga for.
Customers with complaints that had gone to the Ombudsman
The Ombudsman has now transferred all Wonga cases back to the administrators. The Wonga website has not yet been updated to say this.
These complaints will be assessed using the new automated tool. If Wonga had already offered you an amount, your refund will be set at the higher of that amount and the number that comes out of the automated tool.
Customers with complaints currently with Wonga
Lists of loans are being sent out where people have asked for them but no decisions on refunds are currently being issued. These complaints will be assessed using the new automated tool.
The “8 week point” no longer has any significance as you cannot send these complaints to the Ombudsman any more.
It’s not too late to ask for a refund
It is not too late to make a complaint. 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…
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.
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. If you don’t know your customer number, give your date of birth. Also give the email address at the time you borrowed if this has changed.
- 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.
There is no need to give any further information or to use the normal payday loan refund template, which is much more detailed.
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!
What about 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.
“Being able to repay without hardship and without borrowing elsewhere” is the definition of whether the loan is affordable for you. If you can repay it without hardship and without borrowing from another lender, this is the best option for you.
But 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.
As a result, you should consider not making any payments to Wonga if they will cause you financial problems. Any payments you do make are likely to reuce the amount of a refund you will get.
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. And if you have had loans from other payday lenders, look at making an affordability complaint to them too.