POLICE are to look again at whether payday lender Wonga should face a criminal investigation after it sent fake legal letters to pressure customers in arrears to pay up.
The City of London force discussed the case a year ago but decided to leave it to regulators so the 45,000 consumers affected would not face delays in receiving compensation.
Now the Financial Conduct Authority’s (FCA’s) investigations have concluded and a compensation agreement has been reached, police said they will “be reassessing whether a criminal investigation is appropriate”.
Earlier this week, Wonga said it had agreed to pay £2.6 million in compensation for the letters it sent from non-existent law firms. The Law Society has already stepped up pressure for a criminal investigation to be held into Wonga.
The society, which represents around 160,000 solicitors, said it has asked the Metropolitan Police to investigate Wonga and consider whether any offences, such as blackmail, or those under the Solicitors Act, have been committed.
It has also called on the FCA to hand over copies of its investigation. The FCA confirmed it had been contacted by the society but declined to comment.
Law Society chief executive Des Hudson said: “It seems the intention behind Wonga’s dishonest activity was to make customers believe their outstanding debt had been passed to a genuine law firm [and that] court action would follow if the debt was not repaid.”
The case – which consumer campaigners described as a “shocking new low” for the payday industry – saw Wonga add charges to some customers’ accounts to cover administration fees for sending the letters, from fictitious firms Chainey, D’Amato & Shannon, and Barker and Lowe Legal Recoveries.
The FCA could not impose a fine on Wonga for what it described as “unfair and misleading” debt-collection practices between October 2008 and November 2010, because the failings were uncovered by a previous regulatory regime. It does not have powers to issue retrospective penalties.
Wonga has apologised “unreservedly” and said the “few” people directly involved with sending the letters were no longer in the business.
A spokesman for Wonga said its focus was on compensating customers who received the “unacceptable” debt-collection letters.
The Law Society said that, in its letter to the FCA, it has asked the regulator to provide copies of the fake legal letters and the regulator’s investigation files.
The society said it is also asking the Solicitors Regulation Authority (SRA), which administers the register of solicitors, to investigate whether there is a case under the Solicitors Act or under the Legal Services Act, “with a view to prosecution if the investigation discloses sufficient evidence”.
The SRA has declined to comment on what it plans to do.
The title of solicitor is covered by Section 21 of the Solicitors Act 1974, as well as misuse of “any description implying that (a person) is qualified or recognised by law as qualified to act as a solicitor”.
Section 17(1)(a) of the Legal Services Act 2007 prohibits any person, who is not entitled under act to carry on activities reserved for qualified lawyers, from wilfully pretending that they are legal practitioners.
A statement from the Metropolitan Police said: “We have received a letter and have made contact with the person who wrote the letter.”