News Column

Financial Mail on Sunday, London, Simon Watkins column

June 29, 2014

By Simon Watkins, Financial Mail on Sunday, London

June 29--THE Mail on Sunday and Wonga have never seen eye to eye. Indeed, the entire payday lending industry is one we are proud to have put under the spotlight many times. But even we are staggered by last week's revelations that Wonga had sent fake solicitors' letters to its borrowers.

Payday loans, which charge indefensible interest rates, are a dubious line of trade at the best of times and thousands of people are dependent on them. But debates about whether the rates are reasonable or the marketing is fair now seem academic. Sending out fake letters purporting to be from a law firm is simply illegal. Used against people in financial trouble, it is a vile practice.

In a further stunning revelation, boss Tessa Cook was not told about an investigation by the City watchdog into the fake letters when she was made managing director. Amazingly, she does not think she should have been told as the fakery was 'in the past'.

We should remember these practices occurred during Wonga's years of fastest growth. Its success as a business, which has made multi-millionaires of its founders, is built on an attitude and a culture that showed contempt for customers and a ruthlessness that led some staff to think it was part of their job to illegally intimidate borrowers.

As for the victims, they will receive a small compensation payment. Many are probably short of money and might be thankful for small mercies. But one wonders how Wonga founder Errol Damelin, who has since left the company, would react if he was a sent a fake solicitor's letter demanding repayment of debts.

Perhaps he would also be grateful for compensation of a few pounds. Or would he reach for his chequebook and pay a City law firm to sue for millions?

MEANWHILE, the difficulty that any company has in eradicating a poisonous culture has been shown once again by Barclays. Two years after the Libor scandal, the British bank is again facing charges in the US of deception.

In essence, the New York attorney general claims Barclays falsely led investors such as pension funds to believe that when they traded shares through its private system, they were not being exposed to aggressive and speculative dealers.

Despite what I believe is a genuine desire on the part of Barclays chief executive Antony Jenkins to clean up its culture, the alleged deceptions took place at least in part under his tenure and at a company under the glare of international banking regulation and with a stock market listing.

If 'St Antony' is having trouble cleansing Barclays, what hope can there be for Wonga?


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Source: Financial Mail on Sunday (London, England)

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