Financial News

  • 30 June 2014, 8:13

Fake Letters: Wonga May Face Criminal Probe

City of London Police have confirmed they are to look again at whether the payday lender Wonga should face a criminal investigation.

This week the firm agreed to pay £2.6m in compensation to 45,000 customers after it was found to have sent letters from two fake law firms.

The letters were to pressure people in arrears into paying up.

They threatened legal action and gave the impressionthat †outstanding loans had been passed to debt recovery firms.

The police force discussed the case a year ago but decided at the time it should be left to regulators.

However, now a compensation deal has been reached between Wonga and the Financial Conduct Authority (FCA), officers will "be reassessing whether a criminal investigation is appropriate".

Meanwhile, the industry body representing solicitors has urged the Metropolitan Police to launch an investigation into Wonga.

The Law Society has asked Scotland Yard to determine if the fake legal letters amounted to blackmail or deception, and called on the regulator to hand over documents it holds on Wonga.

The FCA confirmed that the Society, which represents around 160,000 solicitors across England and Wales, had been in contact.

Law Society 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."

Wonga is Britain's biggest payday lending firm, and has since apologised for its action between October 2008 and November 2010.

The short-term consumer credit sector has come under increased regulatory scrutiny over business practices and potential four-digit interest rates.

The Wonga action has been described by consumer campaigners as a "shocking new low" for the payday industry.

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