More than 40,000 Wonga customers are seeking compensation from the defunct payday lender, according to documents released by the Treasury Committee. A letter sent by administrators to the firm expects the number to shoot up further.
Controversial payday lender Wonga collapsed into administration in August 2018, following a slew of compensation claims which had rocked the company in recent years. Grant Thornton was subsequently appointed to oversee the company’s winding down after it failed to secure a deal with its own lenders.
Since then, the number of claims for compensation from Wonga has shown no signs of slowing – in fact it has exploded – as since January the estimated 10,500 cases has mushroomed into over 40,000. As more borrowers who were sold unaffordable loans come forward, correspondence between Grant Thornton and the Treasury Committee has suggested the situation may worsen.According to a letter from Grant Thornton to Committee Chair Nicky Morgan, “The total number of redress claims is currently more than four times the number you referred to in your press statement on 26 February and we can expect this to increase, when the administrators publicly request claims from borrowers who believe they may have been sold an unaffordable loan.”
The letter came as a response to Morgan, who had written to Grant Thornton to ask how the professional services firm intends to progress outstanding complaints against Wonga. Morgan now understands the issue to be “much bigger than expected.”
As a result, Morgan warned that as Wonga’s creditors and claimants are now in the hands of an administration process, waiting to discover what their share of Wonga’s assets will be, this could be “smaller as more people make claims.” She added that the Wonga debacle raises questions about whether the coverage of the Financial Services Compensation Scheme should be widened to provide protection for customers of high-cost short-term lenders and those of firms that later go bust.
Recently installed Grant Thornton CEO David Dunckley, meanwhile, responded that the consultancy will set up a portal for customers to make claims directly online. There is, however, currently no “go-live” date for this. At the same time, Dunckley advised customers that using a claims management company will not accelerate the claims process, and may expose them to charges that will be deducted from any final payment they might receive.