Last month, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, wrote to the Financial Conduct Authority (FCA) about the impact of the failure of Wonga on those with outstanding complaints with the Financial Ombudsman Service (FOS).
When Wonga went into administration in August 2018, the 10,500 consumers who had complaints open about the payday lender with the FOS were unable to have their complaints resolved. They are also not entitled to any compensation because high cost short-term credit firms are not covered by the Financial Services Compensation Scheme (FSCS).
Many of the complaints stem from FCA regulation introduced in 2014, which brought in an affordability criteria to consumer credit activities. Those given loans that they were unable to afford can complain to the FOS to get their money back, including interest, charges and further compensation.
In her letter to the FCA, to which Andrew Bailey, Chief Executive of the FCA, has responded, Mrs Morgan expressed the Committee’s concern that consumers, many of whom are likely to be vulnerable, may be at a significant financial disadvantage as they are no longer eligible to claim through the FOS nor are eligible for compensation through FSCS.
Mrs Morgan has also written to Grant Thornton, Wonga’s administrators, about former Wonga customers who had complaints open with the FOS.
Commenting on the correspondence, Mrs Morgan said:
“It cannot be right that over 10,000 people who may have been mis-sold loans are just cast aside, especially as many will be vulnerable consumers.
“These people have been left to fend for themselves by Wonga, the FCA and the FOS. They’ve been allowed to fall thought the cracks with nobody taking responsibility for their mistreatment.
“I have written to Grant Thornton, Wonga’s administrators, to understand how they intend to progress outstanding complaints against Wonga.
“If Wonga continues to damage people’s finances from beyond the grave, it may be time for the Government to intervene.”