Payday lender Wonga used fake lawyers to recover funds, according to an investigation by the Financial Conduct Authority.
Customers received letters from the made-up law firms “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries” pressuring them to repay loans and threatening legal action.
Around 45,000 people are set to be compensated for the action taken between 2008 and 2010.
“Wonga’s misconduct was very serious because it had the effect of exacerbating an already difficult situation for customers in arrears,” said Clive Adamson, director of supervision at the FCA.
“The FCA expects firms to pay particular attention to fair treatment of those who have difficulty in meeting their loan repayments.”
Wonga will be contacting customers in July to offer them compensation.
“We would like to apologise unreservedly to anyone affected by the historical debt collection activity and for any distress caused as a result,” said Tim Weller, interim chief executive of Wonga.
Last month, we reported that Wonga’s CEO Niall Wass stepped down after just six months.
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