The Law Society has asked the Metropolitan Police to investigate Wonga after it emerged that the UK’s biggest payday lender had sent letters to customers in arrears from non-existent law firms, threatening legal action.
In a statement today (27 June) the Law Society said it had asked the police to consider whether Wonga had committed the offences of obtaining a pecuniary advantage by deception and blackmail, as well as implying it was or deliberately pretending to be solicitor.
The Financial Conduct Authority (FCA) announced this week that Wonga had been ordered to pay £2.6m in compensation to around 45,000 customers, after the lending company 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 other third party.
Further legal action was threatened if the debt was not repaid.
In fact, neither Chainey D’Amato & Shannon nor Barker & Lowe existed and Wonga was using this tactic to maximise collections by piling the pressure on customers.
The Law Society has also called on the FCA to hand over copies of its investigation – including copies of the letters from non-existent law firms – and the Solicitors Regulation Authority to examine whether an offence has been committed under the Legal Services Act 2007 with a view to prosecution.
Outgoing chief executive Desmond Hudson said: ‘It seems that the intention behind Wonga’s dishonest activity was to make customers believe that their outstanding debt had been passed to a genuine law firm. It looks like they also wanted customers to believe that court action undertaken by a genuine law firm would follow if the debt was not repaid. Depending on the precise circumstances of what has happened, that could amount to blackmail and deception, as well as offences under the Solicitors Act 1974 and Legal Services Act 2007.’
In 2012 Wonga made nearly four million loans to over one million customers. The agreement with the FCA says that Wonga must identify and pay redress to all affected customers. While some customers will receive cash, others will likely have their outstanding balance reduced.
caroline.hill@legalease.co.uk