Police to meet FCA over Wonga fake letter furore

Last Wednesday the FCA said the payday lender was to pay £2.6m in compensation, after it sent letters from invented law firms to tens of thousands of customers.

The company, which lends consumers up to £1,000 at an annual percentage interest rate of 5,853pc, wrote to 45,000 customers who had fallen into arrears, posing as “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries”.

The letters — sent between October 2008 and November 2010 — appeared to give customers the impression that their debts had been passed on to a collection agency, and threatened them with legal action if they did not repay.

The Law Society on Friday said it had asked the Metropolitan Police to investigate whether any offences, such as blackmail or those under the Solicitors Act, had been committed.

But any investigation would be run by the City of London force as it specialises in financial crime.

Meanwhile, it emerged this weekend that in the wake of last Wednesday’s admissions, Wonga has introduced a series of changes designed to appease customers.

Tessa Cook, head of Wonga’s UK consumer lending arm, has introduced a three-day grace period for customers who don’t meet their payment date before a default fee is charged.

In addition, default fees have been reduced from £30 to £20. The two changes are understood to be part of a series of broader changes to the way Wonga interacts with its customers, particularly those in arrears.

The changes are part of a wider reset of the way Wonga operates in the UK, which are likely to include changes in marketing and pricing.

However, in an interview with this newspaper, Ms Cook admitted that the company did and would continue to sell on the debts of a small minority of customers who continued not to pay up.

Asked if it sold Wonga debt on to third-party agencies, she said: “Yes, we do. But these are customers in long-term arrears … for the first couple of months of the debt, we provide the service. And we’re absolutely customer-focused and sympathetic. But every financial services organisation uses debt collection agencies. And we have to be clear, this is a tiny minority of our business.”

Ms Cook also admitted that the public revelations of the past week had been “difficult” for Wonga’s 1,000 employees, but would not comment on whether it had had any impact on demand for loans.

“It’s been difficult, but what is motivating people is that the reason why we exist has not changed: widespread demand for access to short-term consumer credit, and our customers, in the main, really enjoy using our services and appreciate the way we help them.”

She added that Wonga’s board — currently without a chairman or a chief executive — had remained “supportive” of the management team over the fake letters incident.

When asked about the potential for a police investigation, a Wonga spokesman said: “'Wonga’s focus is on compensating the customers affected by the historic debt collection letters.”

more