Wonga stopped lending and went into administration on 30 August 2019, unable to pay refunds on all the payday loan affordability complaints it was getting.
An unaffordable payday loan is one you could only manage to repay if you borrowed more elsewhere or didn’t pay some bills. So you may have repaid a loan but still be able to claim a refund of the interest you paid if the loan was unaffordable.
- A new online page headed Make a claim for unaffordable loans from Wonga was set up in April 2019 by the Administrators for people to submit complaints.
- Most people who have already submitted complaints do not need to do this.
- People have until 30 September to submit claims using that page.
- 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.
You can also ask for refunds from other payday lenders – see How to ask for a payday loan refund which has free template letters. But don’t use those letters for Wonga, use the special Wonga forms explained here.
Worried about the email being a scam?
If you have just had an email from Wonga or the Administrators you may be worried this is a scam.
Many thousands of emails are being sent. Yours is probably ok if you have ever had a Wonga loan, but the safe thing is not to click on any link in an email.
Instead you can use the link to the new online page above. Or go to the Wonga.com website and use the button which says Click here for Claims Portal.
How many people may have a claim against Wonga?
At the end of August 2018:
- 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.
By end February 2019, the number of complaints had increased to 49,000.
Now the Administrators are asking for other customers to submit complaints using the new page. I expect there will be more than 100,000 people with complaints in the end.
Customers won’t be able to get help from the FSCS, see Why the FSCS does not cover payday lenders for details.
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. These Proposals were accepted in the vote by creditors.
The Administrators have reported on progress up to end February 2019.
The court has agreed to the one-year administration deadline being extended.
You have to ask for a refund before 30 September
It is not too late to make a complaint about unaffordable loans and ask for a refund.
Most people who have already submitted a complaint do not need to do this, see Wonga’s New Claims Portal where I go through the seven (!) different cases looking at who does have to resubmit their complaint using the new page and who doesn’t.
If you have not already submitted a complaint, you should use the new Claims Portal, not by sending an email. This is easy to do. You do not need to provide details of your loans or explain why they caused you hardship or calculate what refund you should ask for.
This online claims page will be closed at the end of September 2019,
How the administrators will assess claims
The Administrators are developing an automated tool to assess complaints. It will be in line with the approach the Ombudsman currently uses. This will assess all loans a customer had, including those over 6 years, to decide if a refund is due. It will look at
- how large a loan is 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.
If it decides some loans were unaffordable, it will calculate a refund amount and add 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.
The Administrators have notified people on 2 May that they expect to make payments by 30 January 2020.
Do you still owe a balance?
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 reduce 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.