The government may have to step in to help customers seeking compensation from former payday lender Wonga if it "continues to damage people’s finances from beyond the grave," an MP has suggested.
MP Nicky Morgan, who chairs the influential Treasury Committee, has written to Wonga's administrator, Grant Thornton, about the 10,500 people who had complaints open with the Financial Ombudsman Service (FOS) when the firm went bust last year, leaving them "to fend for themselves”.
Wonga collapsed in August after a surge of people made compensation claims over historical loans.
Caroline Wayman, chief ombudsman at the FOS, told the Treasury Committee last month customers who had open complaints will not be able to have their issues resolved as they fall outside the regulator's remit. Customers are not entitled to get their cash back as short-term credit firms are not covered by the Financial Services Compensation Scheme (FSCS).
- What has the government done to help Wonga customers so far?
Mrs Morgan previously wrote to the City watchdog to warn that vulnerable customers may be at a “significant financial disadvantage” as they can no longer claim through the FOS and are not eligible for compensation through the FSCS.
Andrew Bailey, chief executive of the Financial Conduct Authority, directed Mrs Morgan to Grant Thornton, saying former Wonga customers should apply to the accountancy firm for redress.
However, Mrs Morgan said customers have been “cast aside” with no regulatory authority taking responsibility to deal with the complaints, and opened up the possibility of Government intervention.
“It cannot be right that over 10,000 people who may have been missold 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.”
- What have Wonga's administrators said?
A representative from Grant Thornton said: “The administrators are continuing to conduct an orderly wind-down of the business in accordance with their statutory obligations, supporting customers where possible during this period, and are developing a methodology for adjudicating claims in a fair and reasonable way in the circumstances of the administration.
“Our aim is to treat claims fairly and efficiently, and to maximise the assets we receive in order to best compensate creditors, including claimants.
“We monitor those customers who may be vulnerable – including financial difficulty, financial hardship and health and well-being – and are working to ensure appropriate support for these people.”