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OFT warns payday lenders as Wonga apologises to MP over Twitter abuse

22 November 2012  |  6975 views  |  0 Parliament Big ben London

As the UK's Office of Fair Trading (OFT) writes to payday lenders warning them over their conduct, the industry's most notorious practitioner, Wonga, has been forced to apologise to its fiercest critic, MP Stella Creasy, for a savage, anonymous Twitter attack.

Creasy, Labour MP for Walthamstow, has been campaigning for greater regulation of what she calls 'legal loansharking', and Wonga in particular, since her election in 2010.

Earlier this week, the Guardian uncovered evidence that an anonymous Twitter account operated from within Wonga's London office was being used to attack the MP, calling her "mental", "nuts", and a "self-serving egomaniac".

A computer at the firm's office was also used to remove reference to Wonga's controversial sponsorship of Newcastle United Football Club on Wikipedia.

Wonga has admitted that one of its "junior employees" had made "unauthorised comments" on the Web, while the Twitter account, @DanielSargant1, was quickly shut down.

On OpenWonga, a site owned by the lender, editor Luke Manning says that "OpenWonga was unaware of, had nothing to do with, and disassociates itself entirely from the comments directed at Dr Creasy - which were made anonymously and without authorisation by another Wonga employee. A disciplinary process is ongoing, and the matter is being taken extremely seriously by the company."

Creasy has also convinced the firm, as a gesture of goodwill, to hand out flyers promoting a 'family finances fair' being held in her constituency this weekend to help people facing money problems.

Meanwhile, the OFT has written to all 240 payday lenders highlighting its "emerging concerns over poor practices" in the sector and opened formal investigations into some as a result of a review launched earlier this year.

In a progress report, the watchdog says it has concerns about checks carried out by some lenders; the proportion of loans that are not repaid on time; and debt collection practices. Having carried out on-site inspections at 50 firms, it warns that the majority will risk enforcement action if they do not improve specific practices and procedures.

David Fisher, director, consumer credit, OFT, says: "We have uncovered evidence that some payday lenders are acting in ways that are so serious that we have already opened formal investigations against them. It is also clear that, across the sector, lenders need to improve their business practices or risk enforcement action."

A full report will be published in the new year but in the meantime the OFT has has published new debt collection guidance.

Creasy, however, has called for government action, saying: "We know now 5 million Brits are looking to the this toxic form of credit to make ends meet in the coming months- self regulation of this industry has clearly failed and its time the Government stopped ignoring these problems and introduced caps to protect British consumers as they do in other countries from the debts this type of lending can cause."

KeywordsSOCIAL MEDIA

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