Citizens Advice Scotland has welcomed the news that the Financial Conduct Authority is to force Wonga to pay its customers £2.6m in compensation for sending letters from non-existent law firms.
CAS Head of Policy Susan McPhee says,
“We have long called for regulators to take meaningful action to clean up the lending industry, so we welcome the fact that the FCA are using their powers in this instance. Hopefully this will serve as a warning to the industry as a whole that this kind of wrongdoing will not be allowed.
“Wonga’s conduct in this example is completely unacceptable and more befitting of a backstreet lender, not the large responsible financial company that they claim to be. The idea that one of the UK’s fastest growing financial companies can think it’s acceptable to make up fake legal firms to bully customers is extraordinary, and it is of course right that they have been penalised for this.
“The compensation sum will see £50 per customer affected for the distress and worry caused by their fake ‘lawyers’. We also support the FCA’s decision to appoint a member of staff to oversee Wonga and make sure this is all paid back promptly and correctly.
“This case however does show that customers can still have to wait far too long for recompense, given this issue was first reported to regulators as far back as 2011. It’s important that regulators, consumer groups and customers themselves continue to monitor the lending industry to identify and report any wrongdoing, and it’s equally important that action is taken swiftly when such activities are uncovered.”
For the last few years CAS has been highlighting wrongdoing in the payday lending industry, and has recently called on the organisers of the Commonwealth Games to boycott all advertising from payday lenders during the Games.