14Oct

A system error at the UK’s largest payday lender, Wonga, resulted in 7,000 customers having a loan repayment taken twice. The issue affected the lender’s Flexi loans, which are repaid in three monthly instalments, rather than its core payday loan product.

Some customers reported having as much as £600 extra taken from their account. The firm has promised to refund all affected customers in full, including an allowance for any additional fees incurred as a result, but some people have already reported being unable to pay essential bills as a result of the glitch. The situation could be made worse for some customers as the refund payments may take several working days to appear in their bank account.

Wonga said that this was the first occasion on which this problem had occurred, and added in a statement:

“We experienced an internal system error on Friday morning which resulted in Flexi Loan payments being debited twice from some customers.

“We notified all those affected and took action to credit the right amounts back to customers on Friday. We apologise for the inconvenience caused.”

The regulator, the Financial Conduct Authority (FCA), has not issued any form of statement on the latest issue affecting the firm. However, it is sure to be aware of the issue and to be monitoring the firm’s response.

Authorised firms of all types and sizes need to devote appropriate resources to their IT systems. They need to ensure their systems work effectively and are safe and secure. The various companies of the Royal Bank of Scotland banking group have experienced a number of IT glitches in recent years, the most serious of which led to a £42 million fine from the FCA after customers were unable to access banking services for an extended period.

Payday lending firms are of course also under great scrutiny from the FCA. In June 2014, Wonga announced that it would compensate around 45,000 customers for the ‘distress and inconvenience’ caused by sending them debt collection letters which purported to come from law firms, firms which in fact did not exist. All affected customers should have received a £50 payment.

The firm also agreed to write off £220 million of debt from some 330,000 customers on the grounds that the loans would not have been granted under new affordability criteria.

Most recently, in September 2016, smaller payday lender CFO Lending was forced to pay £34.8 million in redress by the FCA. The regulator uncovered a litany of issues concerning the firm’s treatment of customers, such as taking repayments without the customers’ permission; using continuous payment authority to collect outstanding payments even where it had reason to believe that the customers concerned were in financial difficulty; failing to engage properly with customers experiencing repayment problems, such as refusing reasonable repayment plans suggested by customers; and sending threatening and misleading letters, texts and emails to customers.

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.