Wonga compensation claimants have been left to “fend for themselves” after the controversial payday lender went bust and the government may have to intervene, MPs have warned.
The lender went into administration in August after a barrage of compensation claims caused it to collapse.
The compensation claims mostly for past irresponsible lending – stemming from Financial Conduct Authority regulation – cost Wonga £550 if they reached the Financial Ombudsman Service regardless of whether they were upheld.
Around 10,500 people had outstanding claims, the Financial Ombudsman Service said, as it admitted it was powerless to get people Wonga user their money back.
Claimants are also ineligible for the Financial Services Compensation Scheme (FSCS), which does not cover high cost short-term credit firm.
Treasury Select Committee chair Nicky Morgan said: “It cannot be right that more than 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 FCA and the FOS. They’ve been allowed to fall through the cracks with nobody taking responsibility for their mistreatment.”
A spokesperson for Wonga’s administrators Grant Thornton said: “Our aim is to treat claims fairly and efficiently, and to maximise the assets we receive in order to best compensate creditors, including claimants.
“We monitor those customers who may be vulnerable (including financial difficulty, financial hardship and health and wellbeing) and are working to ensure appropriate support for these people.”
The FCA responded to Morgan and defended its decision not to include high cost short-term lenders in the FSCS.
It said the decision was made as most high cost short-term lenders do not hold client money or assets, losses to consumers have reduced in recent years and a stand-alone funding class would be unlikely to be sustainable to cover compensation.
The Financial Ombudsman Service declined to comment.