In an investigation begun by the Office of Fair Trading and taken forward by the FCA, Wonga was found to have sent letters to customers in arrears from non-existent law firms, threatening legal action. In some instances, Wonga also added charges to customers’ accounts to cover the administration fees associated with sending the letters.
In a statement released today, the City of London police "concluded there is not sufficient evidence to progress a criminal investigation."
The failings, which took place between October 2008 and November 2010, saw Wonga, and other companies within its group, use unfair debt collection practices which put customers under great pressure to make loan repayments that many could not afford.
During this time, Wonga sent communications 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.
In June 2014, the lender entered into an agreement with the FCA to pay over £2.6m in compensation to around 45,000 customers.
Clive Adamson, then director of supervision at the FCA, said:
“Wonga’s misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears. We are pleased that Wonga has been working with us to put matters right for its customers and to ensure that these historical practices are truly a thing of the past.
“The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments.”
A City of London police spokesperson said:
"In 2012, the Office of Fair Trading met with the City of London Police to consider the OFT investigation into a specific case involving Wonga’s debt collection practices and to decide whether the matter should be referred to the National Policing Lead for Fraud. The decision taken was that the most appropriate course of action was for the OFT to continue with its own investigation - the interests of the consumer being at the fore.
"In April 2014 the OFT closed and the Financial Conduct Authority, which had taken on the regulatory responsibility regarding consumer credit, entered into discussions with Wonga and secured compensation for the customers affected. Once this matter was concluded the City of London Police agreed it was in the interests of the public to review further material that had been obtained both during the FCA discussions and after the original OFT referral in 2012; to assess whether a criminal investigation was now viable.
"The central allegations were that Wonga had deceived its customers by sending letters falsely purporting to be from lawyers with the aim of recovering outstanding debts from customers. After a thorough review of all the material gathered the City of London Police has concluded there is not sufficient evidence to progress a criminal investigation."
