As recently reported in the press, the Financial Conduct Authority (FCA) has ordered that Wonga must pay £2.6 million in compensation after sending letters from non-existent law firms to customers in arrears.
About 45,000 Wonga customers will be compensated. It is thought that the letters were sent between October 2008 and November 2010.
The FCA’s investigation found that Wonga had sent letters to customers from fake law firms called “Chainey, D’Amato and Shannon” and “Barker and Lowe Legal Recoveries”. The FCA held that it believed Wonga used this tactic to try and maximise collections by putting pressure on its customers to pay.
This case has highlighted a loophole where organisations and individuals can pass themselves off as legal professionals by calling themselves legal firms. The term “law firm” is not protected. This case has also highlighted a number of important issues around organisations and individuals presenting themselves in a misleading way so that the public believe them to be regulated legal professionals such as solicitors.
Under the Solicitors Act 1974, anyone unqualified who holds themselves out as a solicitor is committing a criminal offence and can be jailed for up to two years. It is unclear at this stage whether any criminal proceedings will be brought against Wonga.
It is always best when engaged in litigation (including debt recovery) to instruct a solicitor. Your solicitor should have the necessary expertise to assist you in either bringing debt recovery proceedings or defending them. Furthermore, it is a legal requirement for all law firms employing solicitors to have indemnity insurance. In the event your solicitor is negligent and a professional negligence claim is successful, the solicitor’s indemnity insurance will pay out for any losses.
Our Commercial Litigation team has extensive experience in bringing and defending debt recovery actions. If you are embroiled in a debt recovery action, please contact a member of the team to discuss further.
Myerson Solicitors LLP are the premier commercial litigation solicitors in Cheshire and South Manchester. Our expert solicitors can advise on all aspects of commercial disputes and debt recovery.