WONGA should be forced to pay compensation of £203 trillion for sending fake legal letters to reflect its more than 5,000% interest rates, a Labour MP said.
Andy Sawford, the Corby MP, urged Commons leader Andrew Lansley to toughen up the Government’s response to the pay day lender after the Financial Conduct Authority (FCA) condemned “unfair and misleading” debt collection practices.
Wonga has to pay £2.6 million in compensation to customers it pursued with the fake letters but the FCA is powerless to impose a fine as the events occurred between October 2008 and November 2010 under the previous regulatory regime.
Speaking during the weekly Commons business statement, Mr Sawford said: “Can we have emergency legislation on compensation and compound interest to make Wonga pay out not £2.6 million compensation for unfair practice but at their own outrageous interest rates of 5,853%, make them pay £203 trillion?
“Perhaps then they would understand the misery they cause?”
Mr Lansley said: “You will recall in the last session steps that were taken to put a cap on pay day lending because we were responding to some of those issues.
“As you can see, it is important for the FCA to ensure this business, which is a perfectly legitimate business, must be undertaken in a legitimate fashion. When it isn’t, it is absolutely right the enforcement action is tough.”
In further questions, Labour MP Andy McDonald (Middlesbrough) said: “Wonga’s appalling deception and dishonesty has been laid bare. Can we have a statement from the Chancellor as to why that company or any of their directors should ever hold a credit licence again?
“Or is the Government’s priority and focus the protection of Tory party friends and donors?”
Mr Lansley replied: “The latter part of your remark is uncalled for and inaccurate. You know that.
“Members of the House on both sides will have been shocked by what they saw and the FCA has taken what I think is important action where this is concerned. I’m not in a position to say any more than what the FCA has said so far but I will of course ask the Treasury, in consultation with the FCA, if they are in a position to offer any statement to the House.”