8th Nov 2018
Administrators for Wonga, the payday lender which went bust at the end of August, are planning on automating the compensation process, leading to fears that customers could lose out on outstanding claims.
According to The Guardian administrators Grant Thornton are planning to create a cost-saving “adjudication tool”, which will be used as an alternative to manual processing in order to automatically decided whether or not claims are valid.
However, David Clarke, Head of Policy at financial campaign group Positive Money, warned that such a system could put unsecured creditors – namely customers – at a disadvantage.
He said: “After having been mis-sold loans by automated software, Wonga customers may now be forced to appeal to a similar automated system.
“Just as Wonga’s algorithms failed to account for individual circumstances when making loans in the first place, there are risks that this technology will again fail to take all the relevant factors into account when processing claims, leaving many customers out of pocket.”
When Wonga collapsed the controversial lender faced over 24,00 complaints from customers, with a further 9,500 now with the Financial Ombudsman Service (FOS). Since Grant Thornton were appointed claims have continued to be received at the rate of between 200 and 500 per day.
Grant Thornton said that the computerised process which it is planning to use to judge the validity of claims will be “aligned as closely as possible” to the methodology used by the FOS, while the Financial Conduct Authority (FCA) has also been informed of its plans.
Documents seen by The Guardian suggest that pay-outs to customers with valid claims will be “significantly less” than the full value of the accepted claim.
Conservative MP Nicky Morgan, chair of the Treasury select committee, said: “The demise of Wonga shows that the business model of many payday loan companies is based on its unfair treatment of customers, many of whom were in vulnerable situations.”