YOU CAN NO LONGER MAKE A CLAIM ABOUT WONGA LOANS
THE DEADLINE WAS SEPTEMBER 30.
A payday loan is “unaffordable” if repaying meant you had to get into more debt, by borrowing again or getting behind on bills or other debts. So you may have repaid all your loans but still have a good claim for a refund of the interest you paid – which is usually a LOT.
Find out more about payday loan claims, with a template letter: How to complain to a payday lender.
Wonga collapsed in August 2018. The deadline for making these claims to the Administrators has passed.
In October 2019, Wonga starting making low settlement offers to people who still owe money on their last loan. Read Has Wonga offered you a low settlement? This may be a bad offer! before you accept this offer.
Administration news so far
Wonga stopped lending and went into administration on 30 August 2018, unable to pay refunds on all the payday loan affordability complaints it was getting.
In October 2018, the Administrators sent their Proposals, detailing how they planned to handle the administration, including customer complaints, and a Voting Form to creditors. Creditors voted to approve these Proposals.
The Administrators reported on progress up to end February 2019.
An online claim page was set up in April 2019 for Wonga customers people to submit claims for refunds. The deadline for sending in a claim was 30 September. Any claims received after that date are very unlikely to be considered.
The Administrators are assessing all claims using an automated tool.
In August the Administrators starting sending emails to people saying whether their claims have been successful or rejected. This is being done in batches and it will continue until all the claims are processed.
If your claim is successful you will be told what the refund value has been assessed at. But you will only receive a small percentage of this.
There is no help for Wonga customers from the FSCS, see Why the FSCS does not cover payday lenders for details.
In September, the Administrators sent creditors a further update on progress up to end August 2019. Some key points include:
- at end August, 389,621 claims for unaffordable payday lending have been accepted by the administrators;
- the total value of these claims is c £460million – an average of c £1,200 a claim;
- my comment: £460m contrasts with the figure of £45million which the Wonga directors had estimated;
- £23m of outstanding loans have been collected. The Administrators say that outstanding loans are being taken into account and given the right of set-off where the customer has a claim for unaffordable loans. The remaining loan book will not be sold to a debt collector.
The Administrators expect that payments will be made by 30 January 2020.
Check out the comments at the bottom of this article where readers report on what is happening to their Wonga complaints and refunds.
How many people may have a claim against Wonga?
When Wonga went under:
- there were over 200,000 people with current loans from Wonga – many of them had 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;
- by end February 2019, the number of complaints had increased to 49,000
- at end August the number of complaints had gone up to 560,000, with 389,000 of these having a valid claim.
I said in March that there would be more than 100,000 people with complaints – I was clearly correct!
How the administrators are assessing claims
The Administrators developed an automated tool to assess complaints, using a similar approach to the Financial Ombudsman.
This will be used to assess all the claims, by looking at the customer’s loans, including those over 6 years. It takes account of:
- how large a loan was compared to a customer’s income;
- how often someone borrowed without significant gaps;
- whether there were indications of hardship such as missed payments;
- if there is a balance outstanding for the right of set-off.
Where it decides one or more loans were unaffordable, it calculates a refund amount and adds statutory interest at 8%.
If you are unhappy with the result, you will be able to submit evidence asking for it to be looked at manually.
You will be paid before end January 2020 – but it’s not known how much
There will not be enough to pay the calculated 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 don’t know what percentage will be paid. This will depend on things such as how much Wonga’s foreign operations can be sold for, how many people submit complaints and how much the calculated refunds on these complaints add up to.
Do you still owe a balance?
If you still owe Wonga money and you have a valid claim for a refund, this refund will be used to reduce or wipe out the balance you owe. You will therefore be better off if you do not make any more payments to Wonga. See Wonga customers and the right of set-off.
If you still owe a balance and you have not been assessed by the administrators as being entitled to a refund, I don’t know what will happen to your debt. the latest update from the Administrators suggests they will not sell it to a debt collector.
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.