Customers who believe that they were mis-sold a loan from former payday loan company, Wonga.com, have until 11:59pm on 30th September 2019 to make a final claim.
This announcement follows the application of over 24,000 people who have requested compensation from being sold a loan by Wonga which may have been funded without sufficient affordability checks.
Wonga.com was once one of the UK’s leading tech companies and was pegged for a £1 billion floatation, by a wave of compensation claims for mis-sold loans has seen over £400 million paid back to customers and the former market leader to fall into administration. The demise of the fallen lender has been exacerbated by the cost of administrating loans, which incurs a whopping fee of £500 from the Financial Ombudsman Service for every application.
Customers have been able to request refunds on ‘legacy loans’ which were typically for around £200 to £300 lasting around 14 to 28 days, but often came with exorbitantly high interest rates and £30 for every missed repayment.
Claimants have argued that they were granted high cost loans despite being unemployed, on benefits, in debt or unable to afford the loans – something that Wonga could have potentially checked more thoroughly.
Customers can claim directly on their website with the average claimant receiving around £600 to £1,000, with one father claiming over £3,750 according to The Sun.
The demand for payday loan compensation has also impacted other competitors including Wageday Advance and The Money Shop. Other compensation claims and refund industries have emerged following last month’s PPI deadline. New claims are expected to grow in areas such as gap insurance, bank accounts and car dealership insurance.
For the online loans industry, since the demise of Wonga, customers have moved towards more alternative products such as guarantor loans and personal loans, which are repaid over longer periods of time such as 12, 24 or 48 months. Loans are subject to status or may require a guarantor to co-sign the loan agreement. New lenders have entered the market offer long term loans which are more cost effective including those from Stepstone Credit, Badger Loans and Drafty.