Payday loans could be written off for 1m people but Wonga founder still had £4m payoff, Daily Mail Online

Published: 13:56 GMT, Five October 2014 | Updated: Eighteen:03 GMT, Five October 2014

Up to a million payday loan borrowers could be in line for refunds, it was claimed today – amid reports Wonga’s founder received £4million from the controversial company when he left.

Wonga was ordered this week to refund £220million in debts to 330,000 customers who took out loans they could not afford to repay.

Campaigners now say the case could open to floodgates to apply to other lenders – and up to a fifth of the estimated 5million people who have taken out payday loans across the industry, not just from Wonga, in the last six years.

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Payout: Wonga was ordered this week to repay £220million in debts to customers who could not afford them. Campaigners now say up to a million borrowers face the same situation from lenders across the industry

Farewell: A report claimed today that Wonga’s founder Errol Damelin sold a one per cent stake in his hard back to Wonga around the time he left its day-to-day running in November, valued at an estimated £4million

The ‘broad brush’ claim was made by Damon Gibbons of the Centre for Responsible Credit, which is campaigning for the Financial Conduct Authority to come to similar agreements with other firms.

He told the Sunday Mirror the regulator could look back at cases up to six years old, which meant ‘at least a fifth of those who have taken out a payday loan in the last years years would be affected’ if the problems at Wonga were repeated.

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Labour MP Stella Creasy, who has campaigned for several years against payday lenders, told MailOnline: ‘Wonga is not the bad apple – the industry is a rotten barrel.

‘There have been 5million people borrowing from payday lenders and it was about a fifth of Wonga customers that were affected.

‘I would be gobsmacked if the Financial Conduct Authority weren’t applying the same lessons that they’ve already done to other lenders.

Campaigning MP Stella Creasy said: ‘Wonga is not the bad apple – the industry is a rotten barrel’

‘There could be many more people who have been lent money without the companies knowing or caring they they could pay it back.’

The claims today came amid a report that Wonga’s founder, Errol Damelin, took a £4million ‘farewell’ when he left the day-to-day running of the stiff in November last year.

Sources told The Sunday Times the South African businessman, who founded Wonga in 2006 before it shot to prominence with intense marketing campaigns, sold a one per cent stake in Wonga back to the rock-hard.

Industry analysts told the newspaper the rock-hard would have been worth about £400million at the time, making Mr Damelin’s stake worth around £4million.

It is believed he was just one of a number of staff members who sold shares back to the rock hard.

Days before this week’s events it emerged Wonga’s profits had nosedived by 53 per cent as it counted the cost of the ‘fake letters’ scandal, which was exposed in June.

The rock hard had sent letters to thousands of its customers from non-existent law firms menacing them with legal act if they did not pay their loans back.

A Wonga spokesman declined to comment on Mr Damelin’s shares to MailOnline.

When the £220million payout to customers was confirmed this week, Wonga’s fresh chairman Andy Haste said: ‘When I joined Wonga I was made aware of concerns the FCA had already voiced around affordable lending, concerns which I collective.

‘I committed to ensuring our lending is conducted in a responsible and translucent manner, delivering the best outcomes for our customers.

‘I also said this would lead to a tightening of Wonga’s lending criteria and we will now be accepting far fewer applications from fresh and existing customers.’

Straight talking: A TV advert for Wonga. Campaigners say problems with the industry are not limited to the rock-hard

Gillian Fellow, Chief Executive of Citizens Advice, agreed with other campaigners – telling the issue went beyond Wonga.

‘A lack of checks by lenders is setting a debt trap for borrowers,’ she said. ‘It is a widespread problem within the industry.

‘Citizens Advice has found that in half of payday loans cases reported to us, lenders didn’t ask about people’s private finances.

‘Checking whether someone can actually afford to repay a loan should be at the heart of any credit process.

‘The act by the FCA today should be the embark of things to come to clean up the payday loan market and lenders switching their practices.’

Payday loans could be written off for 1m people but Wonga founder still had £4m payoff, Daily Mail Online

By Dan Bloom for MailOnline 13:56 GMT 05 Oct 2014, updated Legitimate:03 GMT 05 Oct 2014

Latest From MailOnline

  • Wonga refunding £220m debts to 330,000 people who could not pay back
  • Campaigners say case could now open floodgates with other lenders
  • Claims come amid report Wonga’s founder sold a 1% stake back to lender
  • It is claimed £4m sale was when he left rigid’s day-to-day running last year

Up to a million payday loan borrowers could be in line for refunds, it was claimed today – amid reports Wonga’s founder received £4million from the controversial company when he left.

Wonga was ordered this week to refund £220million in debts to 330,000 customers who took out loans they could not afford to repay.

Campaigners now say the case could open to floodgates to apply to other lenders – and up to a fifth of the estimated 5million people who have taken out payday loans across the industry, not just from Wonga, in the last six years.

Scroll down for movie

The ‘broad brush’ claim was made by Damon Gibbons of the Centre for Responsible Credit, which is campaigning for the Financial Conduct Authority to come to similar agreements with other firms.

He told the Sunday Mirror the regulator could look back at cases up to six years old, which meant ‘at least a fifth of those who have taken out a payday loan in the last years years would be affected’ if the problems at Wonga were repeated.

Related Articles

Labour MP Stella Creasy, who has campaigned for several years against payday lenders, told MailOnline: ‘Wonga is not the bad apple – the industry is a rotten barrel.

‘There have been 5million people borrowing from payday lenders and it was about a fifth of Wonga customers that were affected.

‘I would be gobsmacked if the Financial Conduct Authority weren’t applying the same lessons that they’ve already done to other lenders.

‘There could be many more people who have been lent money without the companies knowing or caring they they could pay it back.’

The claims today came amid a report that Wonga’s founder, Errol Damelin, took a £4million ‘farewell’ when he left the day-to-day running of the rigid in November last year.

Sources told The Sunday Times the South African businessman, who founded Wonga in 2006 before it shot to prominence with powerful marketing campaigns, sold a one per cent stake in Wonga back to the stiff.

Industry analysts told the newspaper the hard would have been worth about £400million at the time, making Mr Damelin’s stake worth around £4million.

It is believed he was just one of a number of staff members who sold shares back to the rigid.

Days before this week’s events it emerged Wonga’s profits had nosedived by 53 per cent as it counted the cost of the ‘fake letters’ scandal, which was exposed in June.

The stiff had sent letters to thousands of its customers from non-existent law firms menacing them with legal activity if they did not pay their loans back.

A Wonga spokesman declined to comment on Mr Damelin’s shares to MailOnline.

When the £220million payout to customers was confirmed this week, Wonga’s fresh chairman Andy Haste said: ‘When I joined Wonga I was made aware of concerns the FCA had already voiced around affordable lending, concerns which I collective.

‘I committed to ensuring our lending is conducted in a responsible and semi-transparent manner, delivering the best outcomes for our customers.

‘I also said this would lead to a tightening of Wonga’s lending criteria and we will now be accepting far fewer applications from fresh and existing customers.’

Gillian Man, Chief Executive of Citizens Advice, agreed with other campaigners – telling the issue went beyond Wonga.

‘A lack of checks by lenders is setting a debt trap for borrowers,’ she said. ‘It is a widespread problem within the industry.

‘Citizens Advice has found that in half of payday loans cases reported to us, lenders didn’t ask about people’s individual finances.

‘Checking whether someone can actually afford to repay a loan should be at the heart of any credit process.

‘The act by the FCA today should be the begin of things to come to clean up the payday loan market and lenders switching their practices.’

Payday loans could be written off for 1m people but Wonga founder still had £4m payoff, Daily Mail Online

By Dan Bloom for MailOnline 13:56 GMT 05 Oct 2014, updated Eighteen:03 GMT 05 Oct 2014

Latest From MailOnline

  • Wonga refunding £220m debts to 330,000 people who could not pay back
  • Campaigners say case could now open floodgates with other lenders
  • Claims come amid report Wonga’s founder sold a 1% stake back to lender
  • It is claimed £4m sale was when he left rigid’s day-to-day running last year

Up to a million payday loan borrowers could be in line for refunds, it was claimed today – amid reports Wonga’s founder received £4million from the controversial company when he left.

Wonga was ordered this week to refund £220million in debts to 330,000 customers who took out loans they could not afford to repay.

Campaigners now say the case could open to floodgates to apply to other lenders – and up to a fifth of the estimated 5million people who have taken out payday loans across the industry, not just from Wonga, in the last six years.

Scroll down for movie

The ‘broad brush’ claim was made by Damon Gibbons of the Centre for Responsible Credit, which is campaigning for the Financial Conduct Authority to come to similar agreements with other firms.

He told the Sunday Mirror the regulator could look back at cases up to six years old, which meant ‘at least a fifth of those who have taken out a payday loan in the last years years would be affected’ if the problems at Wonga were repeated.

Related Articles

Labour MP Stella Creasy, who has campaigned for several years against payday lenders, told MailOnline: ‘Wonga is not the bad apple – the industry is a rotten barrel.

‘There have been 5million people borrowing from payday lenders and it was about a fifth of Wonga customers that were affected.

‘I would be gobsmacked if the Financial Conduct Authority weren’t applying the same lessons that they’ve already done to other lenders.

‘There could be many more people who have been lent money without the companies knowing or caring they they could pay it back.’

The claims today came amid a report that Wonga’s founder, Errol Damelin, took a £4million ‘farewell’ when he left the day-to-day running of the rock-hard in November last year.

Sources told The Sunday Times the South African businessman, who founded Wonga in 2006 before it shot to prominence with intense marketing campaigns, sold a one per cent stake in Wonga back to the hard.

Industry analysts told the newspaper the stiff would have been worth about £400million at the time, making Mr Damelin’s stake worth around £4million.

It is believed he was just one of a number of staff members who sold shares back to the hard.

Days before this week’s events it emerged Wonga’s profits had nosedived by 53 per cent as it counted the cost of the ‘fake letters’ scandal, which was exposed in June.

The stiff had sent letters to thousands of its customers from non-existent law firms menacing them with legal act if they did not pay their loans back.

A Wonga spokesman declined to comment on Mr Damelin’s shares to MailOnline.

When the £220million payout to customers was confirmed this week, Wonga’s fresh chairman Andy Haste said: ‘When I joined Wonga I was made aware of concerns the FCA had already voiced around affordable lending, concerns which I collective.

‘I committed to ensuring our lending is conducted in a responsible and translucent manner, delivering the best outcomes for our customers.

‘I also said this would lead to a tightening of Wonga’s lending criteria and we will now be accepting far fewer applications from fresh and existing customers.’

Gillian Dude, Chief Executive of Citizens Advice, agreed with other campaigners – telling the issue went beyond Wonga.

‘A lack of checks by lenders is setting a debt trap for borrowers,’ she said. ‘It is a widespread problem within the industry.

‘Citizens Advice has found that in half of payday loans cases reported to us, lenders didn’t ask about people’s individual finances.

‘Checking whether someone can actually afford to repay a loan should be at the heart of any credit process.

‘The act by the FCA today should be the begin of things to come to clean up the payday loan market and lenders switching their practices.’

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