Thousands yet to claim compensation from Newcastle sponsor Wonga after fake legal letters fiasco

Wonga advert
Wonga advert

THOUSANDS of customers who received fake legal letters from Wonga are yet to receive compensation, a committee of MPs has heard.

In June, Wonga – the main sponsor of Newcastle United – said it had agreed to pay £2.6 million in compensation after sending such correspondence to about 45,000 customers who were in arrears on loans in order to pressure them into paying up.

But, appearing before the Treasury Committee, Wonga’s chief credit officer Nick Brookes said that the firm has only had contact from 5,000 of these customers so far.

He said: “At the moment, we have sent out just in excess of 27,000 letters. There were originally 45,000 customers that were impacted.

“We’ve had responses from around 5,000 customers. We need an active response from those customers, they need to accept the offer that’s going out to them. So far around 99 per cent of the customers who’ve responded are accepting their offer.”

Mr Brookes added: “We’ve had to go back a substantial way in terms of firstly the identification of those customers and then the contact with those customers.”

Wonga had contacted customers in arrears under the names Chainey, D’Amato & Shannon and Barker and Lowe Legal Recoveries, leading customers to believe that their debt had been passed to lawyers. Further legal action was threatened if the debt was not repaid.

These firms did not exist and Wonga was using this tactic, which ended four years ago, to pile the pressure on customers to pay up, City regulator the Financial Conduct Authority (FCA) found.

Mr Brookes, who joined the company two months ago, said Wonga is also about halfway towards making the cultural transformations that are needed within the firm.

He was asked by Treasury Committee chairman Andrew Tyrie to say how far in percentage terms Wonga has progressed in terms of improving its culture to the point where it is acceptable.

Mr Brookes said that within the company there is a “real force of momentum” towards change, adding: “I think we’re probably close to halfway.”

But Mr Tyrie said there have been some “very concerning aspects of behaviour internally in Wonga and I think there appears to be... a lot more work to do in order to sort out the culture of Wonga.”

Last month, Wonga also had to write off a total of £220 million worth of debt belonging to 330,000 customers after carrying out inadequate affordability checks.

The lender has recently tightened up its lending procedures as well as removing its adverts featuring cuddly puppet characters from British TV screens. It has said it expects to be smaller and less profitable in the near term.

Mr Brookes said that changes which have recently been made to improve its lending decisions include looking more closely at a loan applicant’s income in relation to the level of the loan. More help is also now given to those experiencing difficulties with their repayments, he said.

Mr Brookes reiterated previous apologies which have been made by Wonga to its customers.

He said: “The letters that went out which purported to be from solicitors or debt collection agencies were wrong. That shouldn’t have happened.

“Similarly, the recent announcement around affordability and where we weren’t adequately making sure that they could afford the repayments that they were making were wrong as well.

“These are decisions which have impacts on real customers and we deeply regret that that happened.”

Mr Brookes added: “We are working very hard to fix those situations and to make sure that we put (them) right for our customers.”

He said Wonga is at a “crossroads both in terms of the company and the industry... from a cultural perspective we are looking to focus far more on the customer and there is a big programme of change which is going on in Wonga at the moment.”

Wonga has also recently confirmed that it has agreed with Newcastle United to remove its logo from all children’s replica shirts and training wear from the 2016/17 season, as part of a wider review of its marketing to make sure that none of it inadvertently appeals to the very young or vulnerable.

Asked why similar Wonga advertising to that which has already been pulled from television in Britain is still being shown in Poland, Mr Brookes said: “We are committed to removing the puppets in their entirety.”