On 30 August, Wonga ceased trading 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 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.
On 26 October the Financial Ombudsman updated its statement to say:
Grant Thornton [the administrators] has confirmed that whether claims will be accepted – that is, whether complaints will be upheld and whether someone becomes a creditor – and the amount of redress they will then receive, is now a decision for the administrators. Grant Thornton is writing to potential creditors to explain this and the next steps they’ll need to take.
This means 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
On 24 October, the Administrators sent an email with a link to a long letter and a Voting Form to creditors, including customers who had already had a Wonga refund agreed, but not paid.
If you have received this letter, read Letter from Wonga administrators – do you need to do anything? which looks at how to vote if you want. But it’s optional – it won’t affect your complaint if you do not vote.
If you think you should have received a letter as you had an agreed award but you haven’t, email Wonga customer services at firstname.lastname@example.org and put “Administrators Proposals” in the subject line. Explain why you think you should have had this letter and attach any information such as an email confirming your award. Wonga Customer Services have been told to look out for these emails.
How the administrators plan to handle complaints and pay refunds
The letter also contains details about how the Administrators intend to handle complaints. The Administrators are proposing to develop an automated way of assessing complaints that is in line with the approach the Ombudsman currently uses. Further details will be given later.
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 all 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 these 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 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 Ombudsman will be transferring these cases back to the administrators. (The Wonga website has not yet been updated to say this.)
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.
So complaints are reaching the 8 week point without receiving a response from Wonga, but this 8 week point no longer has any importance as the Ombudsman has confirmed it will not work on any new Wonga cases.
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…
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.
Send an email to email@example.com 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.