Wonga SA responds to UK probe | Fin24

Wonga SA responds to UK probe

Jun 25 2014 13:57
Cape Town - As a precautionary measure Wonga.com SA is carrying out a review of its local business, CEO Kevin Hurwitz told Fin24 on Wednesday.

This is after Wonga UK, Britain's biggest payday lender, agreed to pay £2.6m in compensation to 45 000 customers.

It had sent them bogus letters from non-existent law firms that threatened legal action.

Reuters reported that Britain's financial watchdog said the "unfair and misleading" debt collection practices took place between October 2008 and November 2010.

In some instances Wonga added charges to customers' accounts to cover the administration fees of sending the bogus letters.

However, Hurwitz told Fin24 that this practice does not impact South African consumers.

"These historical practices and system errors are limited to Wonga UK," said Hurwitz.

"The South African business operates as a separate business within the Wonga Group with dedicated systems, technology and teams."

He said as a precautionary measure the South African team is carrying out a thorough and ongoing review of its local business.

Wonga UK apologised in a statement and said it is proactively contacting affected customers to ensure they are appropriately compensated.

"The company is significantly improving its business processes to ensure it addresses the widespread demand for short-term credit in the most responsible way," Wonga UK said in the statement.
Tim Weller, interim Wonga CEO, said the company 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,” he said.
System errors
While performing a review of its systems and records in preparation for FCA regulation, Wonga UK discovered technical errors, unrelated to the historical debt collection practices, which resulted in miscalculation of some customers’ balances.

As a result, just under 200 000 customers overpaid the company, the majority by less than £5, while a greater number underpaid.
Having informed the FCA, Wonga will now contact any customers who overpaid as a result of these system errors to offer appropriate compensation. The company will not be seeking repayment from anyone who underpaid.
“We will learn from these mistakes and continue working with the FCA to build a better Wonga for the benefit of our customers," said Weller.

"We’re strengthening our internal controls and systems and now have almost 1 000 people around the world, who are working hard to serve the demand for short-term credit in the most responsible way possible.”

wonga  |  money  |  debt


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