Borrowers who are still awaiting compensation over mis-sold loans by collapsed payday lender Wonga have been “cast aside”, according to a committee of MPs.
The Treasury Committee said many of the 10,500 Wonga customers still waiting for the results of ombudsman rulings on whether they were mis-sold loans, have given up hope of redress.
READ: Wonga appoints administrators as payday loans firm collapses, having stopped accepting new loans
Treasury Committee chair, Nicky Morgan, said: “If Wonga continues to damage people's finances from beyond the grave, it may be time for the government to intervene."
She added: "It cannot be right that over 10,000 people who may have been mis-sold loans are just cast aside, especially as many will be vulnerable consumers.
"These people have been left to fend for themselves by Wonga, the Financial Conduct Authority (FCA) and the Financial Ombudsman Service. They have been allowed to fall through the cracks with nobody taking responsibility for their mistreatment."
Wonga went into administration in August last year, blaming a surge in compensation claims.
Following the collapse of Wonga, the Financial Ombudsman stopped investigating cases for mis-sold loans due to the weakened prospect of recovering compensation.
The Financial Services Compensation Scheme (FSCS) provides a safety net for savings when a lender goes bust but it does not cover compensation or other money owed by collapsed short-term credit firms.
More details sought
Financial Conduct Authority head Andrew Bailey said in a letter to Morgan that it would not be “proportionate” or affordable for the FSCS to cover the collapse of short-term lenders since they did not hold clients’ money or assets.
Wonga borrowers with compensation claims will have to wait behind creditors who may get a small piece of the value of any company assets that can be sold by the administrators.
Many of the borrowers who have lodged complaints have claimed they were mis-sold loans due to their vulnerability and inability to repay.
One of the borrowers, Ashely from Bristol, used Wonga to help fund a gambling addiction.
The Treasury Committee has asked Wonga's administrators for more details on how outstanding complaints could be taken forward. They have requested an answer by early March.