# Why Wonga should pay £34,334,929,158 to everyone it sent false letters to

Why Wonga should be paying everyone it sent false lawyers' letters to £34,344,929,158 each

This week we’ve had the disgusting news that Wonga, in 2008 – 2010, thuggishly sent letters from fake law firms to scare people who’d defaulted into repaying. The FCA has ordered it to pay £2.6m in compensation, which equates to £50 for each customer affected. Sadly, there was no fine, as at the time these acts were committed, the FCA wasn’t regulating consumer credit.

For full details on this and what to do if you’re affected see the Wonga to pay £2.6m after threatening borrowers with fake lawyers news story and Is it just Wonga? Send us other fake letters campaign.

However, I don’t believe that penalty is enough, so I’ve tried to come up with a back-of-an-envelope formula for it.

It’s worth remembering who the people they threatened with these letters are:

a) They took a payday loan, which while not always, can be an indication of financial desperation.

b) They couldn’t pay that payday loan back, which is an even stronger indication of financial problems.

It’s worth remembering too the rigid and unbreakable link between mental health and debt. Those who have mental health problems are five times more likely to be in crisis debt.

Therefore, I think it’s fair to assume a significant number of the 45,556 people who were bullied in this way may have been vulnerable. They will have had their problems exacerbated and been caused fear or distress; which for me, means this compensation for near-fraudulent misrepresentation is small at £50.

Yet let’s set that as a benchmark.

If you were sent these letters in 2009, that’s when you were due the compensation. As you didn’t get it then, you’ve effectively lent Wonga the money.

So what rate shall we use to calculate what you should be owed now? Surely Wonga’s own representative APR of 5,853% is appropriate.

Here are my calculations…

 How £50 compounds at 5,853% APR After 1 year £2,926 After 2 years £171,288 After 3 years £10,025,489 After 4 years £586,791,887 After 5 years £34,344,929,158

This shows after compounding that over five years, on average, people are owed £34,344,929,158 each (ie, £34 billion).

Of course, if you got your letter in 2010 it wouldn’t have compounded anywhere near as much. You could be owed just a few hundred million quid.

Wonga – stop spending money on marketing yourself as righteous, and be righteous.

Before Wonga tries to pick holes in this, let me say I acknowledge this calculation is not how Wonga actually works.

Their loans are short-term and have set amounts that mean this type of compounding wouldn’t happen – the figure is meaningless.

Yet my calculation is still correct, based on its official APR. And I don’t feel like being fair to Wonga after the way it’s treated people.

The real point is it may have co-operated with the FCA on this, but £50 isn’t very much for the distress many may have felt.

Wonga – you’ve spent millions on marketing, advertising and lobbying to try to pretend you’re good guys in a bad industry.

A couple of weeks ago, rather conveniently, your founder and chairman – the man in charge when this all happened – left the company. So in the media interviews yesterday your new MD was able to say "this isn’t about people".

So instead of paying money to pretend to be righteous, why not actually be righteous? Give these vulnerable people you lied to a far bigger slice of cash.

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