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25 Jun 14
10:39
Joined:
Date Joined:
05 Apr 06
Why are they not being taken to court?
Guardian :
Britain's best-known payday lender, Wonga, has been ordered to pay more than £2.6m compensation after it was found to have sent threatening letters to customers from non-existent law firms.
The Financial Conduct Authority (FCA) said Wonga had been guilty of "unfair and misleading debt collection practices". It said the firm would be compensating around 45,000 customers.
However, the firm escaped a potential financial penalty or worse because the FCA only started policing payday lenders in April 2014, and these practices occurred while the now-defunct Office of Fair Trading (OFT) was in charge.
Between October 2008 and November 2010, Wonga sent letters to customers in arrears under the names Chainey, D'Amato & Shannon and Barker and Lowe Legal Recoveries – leading customers to believe that their outstanding debt had been passed to a law firm or another third party. Further legal action was threatened if the debt was not repaid.
In fact, said the regulator, neither Chainey D'Amato & Shannon nor Barker & Lowe existed, Wonga was using this tactic "to maximise collections by piling the pressure on customers".
In some instances, Wonga also added charges to customers' accounts to cover the administration fees associated with sending the letters.
Wonga is the UK's biggest payday lender; in 2012 it made nearly 4m loans to more than 1 million customers.
The poor practice was uncovered by the former consumer credit regulator, the OFT.
This is not the first time the firm has been in trouble for its debt collection practices. In 2012 the OFT told it to clean up its act after it sent letters to customers accusing them of fraud.
The agreement with the FCA states that the lender must identify and pay redress to all affected customers. Some customers will receive cash, while others will likely have their outstanding balance reduced. The regulator has appointed a "skilled person" to oversee the process and ensure affected customers get what they are owed.
The process will start by mid-July, with compensation likely to be paid from the end of July. It is thought that up to 45,000 customers could between them receive a total of more than £2.6m.
The compensation will include a flat-rate £50 settlement offer to all 45,000 customers sent letters, to reflect the distress and inconvenience they have suffered. They will also receive a refund of the charges incurred for being referred to Barker & Lowe or Chainey D'Amato, which has been estimated at £400,000, and will be provided to customers who paid these fees. In some cases there may be extra compensation payments dependent on individual circumstances.
To compound its woes, in April 2014 the firm also reported to the FCA that it had discovered "system errors". These related to the calculation of the amount owing on customer accounts where fees, balance adjustments or the timing used to calculate interest were not consistently applied.
Wonga has apologised and said it was taking action to ensure customers are appropriately compensated.
Tim Weller, interim Wonga chief executive, said: "We would like to apologise unreservedly to anyone affected by the historical debt collection activity and for any distress caused as a result. The practice was unacceptable and we voluntarily ceased it nearly four years ago."
Guardian :
Britain's best-known payday lender, Wonga, has been ordered to pay more than £2.6m compensation after it was found to have sent threatening letters to customers from non-existent law firms.
The Financial Conduct Authority (FCA) said Wonga had been guilty of "unfair and misleading debt collection practices". It said the firm would be compensating around 45,000 customers.
However, the firm escaped a potential financial penalty or worse because the FCA only started policing payday lenders in April 2014, and these practices occurred while the now-defunct Office of Fair Trading (OFT) was in charge.
Between October 2008 and November 2010, Wonga sent letters to customers in arrears under the names Chainey, D'Amato & Shannon and Barker and Lowe Legal Recoveries – leading customers to believe that their outstanding debt had been passed to a law firm or another third party. Further legal action was threatened if the debt was not repaid.
In fact, said the regulator, neither Chainey D'Amato & Shannon nor Barker & Lowe existed, Wonga was using this tactic "to maximise collections by piling the pressure on customers".
In some instances, Wonga also added charges to customers' accounts to cover the administration fees associated with sending the letters.
Wonga is the UK's biggest payday lender; in 2012 it made nearly 4m loans to more than 1 million customers.
The poor practice was uncovered by the former consumer credit regulator, the OFT.
This is not the first time the firm has been in trouble for its debt collection practices. In 2012 the OFT told it to clean up its act after it sent letters to customers accusing them of fraud.
The agreement with the FCA states that the lender must identify and pay redress to all affected customers. Some customers will receive cash, while others will likely have their outstanding balance reduced. The regulator has appointed a "skilled person" to oversee the process and ensure affected customers get what they are owed.
The process will start by mid-July, with compensation likely to be paid from the end of July. It is thought that up to 45,000 customers could between them receive a total of more than £2.6m.
The compensation will include a flat-rate £50 settlement offer to all 45,000 customers sent letters, to reflect the distress and inconvenience they have suffered. They will also receive a refund of the charges incurred for being referred to Barker & Lowe or Chainey D'Amato, which has been estimated at £400,000, and will be provided to customers who paid these fees. In some cases there may be extra compensation payments dependent on individual circumstances.
To compound its woes, in April 2014 the firm also reported to the FCA that it had discovered "system errors". These related to the calculation of the amount owing on customer accounts where fees, balance adjustments or the timing used to calculate interest were not consistently applied.
Wonga has apologised and said it was taking action to ensure customers are appropriately compensated.
Tim Weller, interim Wonga chief executive, said: "We would like to apologise unreservedly to anyone affected by the historical debt collection activity and for any distress caused as a result. The practice was unacceptable and we voluntarily ceased it nearly four years ago."
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It's always the corporate body that gets taken to court.
Why don't the toe -rags who make false declarations to get a company to lend them money get taken to court over that? Why doesn't the law pursue bad debts and always leave it to the company to have to pursue what is owed them, or bring a civil action against the debtor? It always seems loaded against the company concerned, and on the side of the toe-rags. No wonder so many people refuse to pay up. |
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Why don't the toe -rags who make false declarations to get a company to lend them money get taken to court over that?
It's not that hard for these shyster companies to access credit ratings and ask for proof of income. (which we all knoww they don't) |
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* know
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it wont be long before solicitor firms are advising anyone who was sent a letter by "Chainey, D'Amato & Shannon and Barker and Lowe Legal Recoveries" to get in touch as they may be owed thousands in compensation
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It's not that hard for these shyster companies to access credit ratings and ask for proof of income. (which we all knoww they don't)
True but that is not the point I was trying to make. Why doesn't the law protect the lender, when it bends over backwards to protect the borrower? |
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Why doesn't the law protect the lender, when it bends over backwards to protect the borrower?
The law does protect the lender if it's a secured loan, mortgage, car loan with your home as security etc. However these pay day loan companies are preying on the gullible. Another case of rip off Britain imo. |
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Maximum interest rate in USA is 16%
Govt. backing the criminal parasites.....why??? |
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Its not really a case of preying on the gullible. It is simply offering them credit that no one else is willing to do so. The problem with these people is that they want a standard of living that their incomes dont support. How do they get those holidays, tvs, phones, computer consoles? They take out loans that they know they cannot afford. The only problem is that these loans are now so easily and readily available.
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The law does protect the lender if it's a secured loan, mortgage, car loan with your home as security etc.
I'm sorry but we're talking about pay day loans here. |
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The Leopard,
If you were lending to some of these people you would want more than 16% given their propensity to default. Why is the responsibility always put onto the lenders in a situation like this. Noone is forcing these people to take out these loans. As I have said before it is often lifestyle choices that lead to these situations. People need to take more responsibility for their actions instead of blaming others all the time. |
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Exactly Tom.
And the decent borrowers who pay back on time and play by the rules, end up paying more to borrow to make up for the thieves. That's certainly the case with people who don't pay for their utility services and council tax. |
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Govt. backing the criminal parasites.....why???
Good question. It's been brought up in parliament more than once but without any result. I don't know if Cameron's hands are tied or what, but something ought to be done against these shyster 'companies'. Maybe he should pick the brains of some of the finest QC's and see what they suggest. |
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If you were lending to some of these people you would want more than 16% given their propensity to default.
And yet, they still lend to them... |
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It's clear what legislation is required.
Simply make it a criminal offence to make a false declaration in order to obtain money from a firm of lenders. Sorted. |
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Simply make it a criminal offence to make a false declaration in order to obtain money from a firm of lenders.
And while we're at it , make it a criminal offence for lenders to loan money who don't carry out the proper checks to assure the borrowers can afford a pay day loan. |
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Tom 25 Jun 14 11:26
The Leopard, If you were lending to some of these people you would want more than 16% given their propensity to default. Why is the responsibility always put onto the lenders in a situation like this. Noone is forcing these people to take out these loans. As I have said before it is often lifestyle choices that lead to these situations. People need to take more responsibility for their actions instead of blaming others all the time. Many of these people are the less fortunate in our society. I'll educated, struggling to make ends meet. Those people who this Tory government have cast aside. These are the people who rely on food banks, and making decisions whether to pay for gas/electric or food on the table . These are the most disadvantaged people in our society. Unfortunately they fall prey to the vultures of companies like Wonga who exploit these people, and make vast fortunes out of doing so. They are the ' toe rags' not their clients. |
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Facts, I agree with most of what you say, but would a Labour government fair any better in this situation? I doubt it. Like I stated previously, it's a case of rip of Britain imo.
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stewarty,
Then you agree that people who make false declarations in order to obtain money from lenders should be prosecuted? |
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When these same people fail to make any attempt to pay back Credit Unions who is the toe rag then.
Its easy to pick on Wonga but they arent the only people lending to the poorer elements of society. Its a FACT that courts will always side with borrowers even when they blatantly lie to get loans and this is the reason why the cost of credit for so many is so high. If people who could repay loans were made to then there would be lot cheaper credit for everyone. |
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Facts,
Yes many of these people are the less fortunate of those in society. However, the problem I have is that there is no sense of perspective in so many of these situations. Having Sky tv, Widescreen tvs, mobile phones, expensive trainers, games consoles, holidays are often seen as the norm and expected nowadays. They are not and people have to/or should have to earn the right to have these luxury items in their lives. Maybe if they weren't taken for granted to the extent they are and often subsidised by the welfare state than maybe people would be more willing to go out and earn the right to have these items in their lives. |
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stewarty,
Then you agree that people who make false declarations in order to obtain money from lenders should be prosecuted? Well, that's not an easy question Mr Crippen given that the people who borrow from these companies are mostly the poor and working class on minimum wages. If they were to be prosecuted, and fined, how could they pay the fine if they can't afford the loan? As I stated before, these companies have a responsibility to make thorough checks before lending to the people who apply. Meanwhile, I'm watching Cameron batting pretty well at the crease against a poor bowler who goes by the name of Miliband in PM's Q's. |
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Chris Bryant just stumped him !
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It was a no ball.
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What percentage of loan defaulters are due to not being able to pay and what percentage choose not to pay (often assisted by debt advisors)
Im curious as to what people think this number is. |
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how could they pay the fine if they can't afford the loan?
So should we let all law breakers off simply because they can't afford the fines? Laws are made for two purposes, one to punish a crime, and two to deter others from offending. Simply stressing that to make a false declaration could lead to criminal proceeding would deter the majority. The hardened criminals who still flout the law despite the warnings could be made to do community service or ultimately jailed. |
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So should we let all law breakers off simply because they can't afford the fines?
But in this case they're not breaking the law, aren't they? Simply stressing that to make a false declaration could lead to criminal proceeding would deter the majority. Again, this is not stressed in an application. (to the best of my knowledge) The hardened criminals who still flout the law despite the warnings could be made to do community service or ultimately jailed. Christ, you cannot be serious? I would doubt if many who applied for a loan are hardened criminals. The hardened criminals are those who don't advertise their percentage rates... |
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I'm not sure what the fraudulent actions of some to obtain a loan has to do with this specific tactic of debt recovery. I highly doubt that every one of these 45,000 people obtained their loans fraudulently.
Secondly, Wonga have refused to involve the police when others (and then ultimately Wonga themselves) have been defrauded due to their irresposible and slack procedures. It was in the interests of their business model to simply refund and carry on rather than involve the police and reform. Any sympathy for this firm in this circumstance is seriously misguided. |
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But in this case they're not breaking the law, aren't they?
Of course not, but we were discussing if the law was changed. Again, this is not stressed in an application. (to the best of my knowledge) Again see above. |
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The hardened criminals are those who don't advertise their percentage rates...
I've never heard of any of them doing that. Borrowers can only be charged the rates that they have signed for. Did you make that up? |
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Christ Mr Crippen I know you're not thick, but I was talking about the illegal money lenders.
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You're on a wind up stewarty.
I spotted it straight away with you deliberately missing the point but I decided to humour you. It doesn't become you. |
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if everyone told the truth when applying and everyone paid up wonga wouldnt have a buisness because they wouldnt be able to charge sky high rates for loans,as stated above its their business model,they dont want everyone paying up on time
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1tp, they certainly don't want people with assets or a good income paying up on time that's for sure.
I can't see the point of them catching someone on a limited income who can't even pay back the initial loan let alone the penalties. There's nothing there for the pay day companies. The companies are the ones who need protecting then from the toe-rags. |
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Wonga don't involve the police when they are defrauded as it is. Why then they need any further laws on their side is beyond me. They don't give a sh1t about fraud otherwise they would involve the law and get it stopped. When you throw out loans so quickly it's a cost of doing business.
Going back to the original point about the courts and when a company use a tactic like this or indulge in widespread fraud/market-rigging/mis-selling they only ever seem to get fined or have to pay compensation. If Wonga actually bothered to call the police when they are defrauded I bet it would be more likely that whoever operates those scams would go to jail rather than those further up the white collar food chain. |
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Wonga don't involve the police when they are defrauded as it is
That's because there isn't any legislation to protect them. Disputes over debts are classed as a civil offences. Unless it's the company that's in the wrong, then it's a criminal offence. And the police are interested then. |
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You are wrong I am afraid. I am not talking about someone saying they earn 50 quid a week more than they do. When a Wonga loan is paid back using fraudulent information Wonga can involve the police but refuse to do so.
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You're on a wind up stewarty.
I can assure 100% Mr Crippen that I'm on no wind up. Perhaps you can't see the trees from the woods? |
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That's because there isn't any legislation to protect them.
Disputes over debts are classed as a civil offences. Unless it's the company that's in the wrong, then it's a criminal offence. And the police are interested then. That is total bullsh!t. Any company as the pursuer can take a person to court. They might not be successful, but they have the legal right to pursue any debt. |
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stewarty, now you're pretending that don't know the difference between a civil offence and a criminal offence.
Like I said, you're on a wind up. |