After the Financial Conduct Authority (FCA) intervened, Wonga has been forced to agree to make substantial changes to its day to day business with immediate effect. The FCA petitioned Wonga for detailed information about their relending rates to existing customers because there were huge concerns about affordability and spiralling debt for the customer.
When Wonga divulged the information, the FCA concluded that Wonga was failing to take any meaningful steps to ensure that the loan and further loan amounts were sustainable without putting the customer into dire financial straits. The FCA has not specifically said that there has been financial mis-selling but cancelling 300,000 loans supports that there was something seriously wrong.
The total value of the written off loans is £220 million.
Who are the 300,000 customers?
With the agreement of the FCA and Wonga, some 300,000 existing Wonga customers who are already over 30 days in arrears will have their loan written off meaning that they not owe Wonga anything.
Another 45,000 Wonga customers who are up to 29 days in arrears will be given the opportunity to pay back their loan without any interest or other charges and they will also be given the possibility to pay back their loan over a period of 4 months which is substantially longer than normal.
If you are one of the 300,000 customers, you can expect Wonga to contact you by 10 October 2014.
Chat to our No Win No Fee Solicitors on freephone 0800 652 0586.
The FCA will continue to keep an eye on Wonga and further updates are expected in the near future.
Clive Adamson, the Director of Supervision at the FCA said:
“We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations. This should put the rest of the industry on notice – they need to lend affordably and responsibly. It is absolutely right that Wonga’s new management team has acted quickly to put things right for their customers after these issues were raised by the FCA.”
“Effective today, Wonga has introduced new interim lending criteria that should improve customer outcomes. It is also working to put in place a new permanent lending decision platform as soon as possible. The FCA has also required Wonga to appoint a Skilled Person to monitor the new lending decision platform to ensure it has the desired effect; the Skilled Person will report to the FCA and give an independent view of the firm’s activities.”
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