At a recent meeting of lenders, discussion came up that involved the former lender Wonga, and it was stated that they never issued a CCJ to anyone. So is this true?
Every year, there is a small get-together of short-term lenders and brokers, usually towards the end of the year, which gives lenders a chance to discuss the industry, make predictions for the following year, and provides an excuse for social catch-up.
One of the subjects that came up this year was the interesting point that in all its years of trading, Wonga never pursued anyone behind on their repayments to the point of giving them a CCJ (County Court Judgement).
Unfortunately, there was no one representing Wonga in the room to settle the debate, as they ceased trading in 2018. However, there were some people who used to work closely with Wonga, and they were adamant that not one single person ever received a CCJ from Wonga. It is an incredible claim, as Wonga obviously had a lot of bad press from 2008 until they closed.
For those of you who don't know, Wonga was a former payday lender that went out of business in 2018.
We've previously done stories on "Why Wonga Failed"
But why wouldn't they issue a CCJ to people who stopped making repayments?
Reason 1 - It wouldn't achieve anything
The answer could be in the fact that Wonga knew their customers were unlikely to have anything left for a court to order them to pay. After all, courts cannot order blood out of a stone. Even if Wonga were to win a County Court judgement against the borrower, what would they achieve?
It's highly unlikely that having a CCJ would improve the borrower's probability of repaying the debt. A CCJ may lead to the borrower losing their job, and then they definitely wouldn't have been able to make repayments.
Borrowers who chose Wonga were unlikely to have any hard assets. Most people who have assets wouldn't have been using Wonga to obtain a loan in the first place; they could borrow much cheaper elsewhere. Again, what would be the point of getting a CCJ?
Reason 2 - The cost of the lender obtaining a CCJ
The costs to the lender of obtaining a CCJ are not small. The cheapest cost of obtaining a CCJ would be around £300, and if the defendant contests the application, a lender would be looking at over £650. Would a lender really take £650 out of their own pocket to try and recover a loan of around £500? It wouldn't really make much sense, because then the total amount that they would try to recoup would be around £1150.
Reason 3 - Bad PR
Wonga didn't really have the best reputation when it came to the public. Most of the people who had a negative view of Wonga were people who a) had never used them, and b) were never likely to use them. We think a lot of those negative public perceptions were unfair, but that's for another time.
While we believe Wonga may have experienced negative press coverage by pursuing CCJs, overall we don't believe it would have hurt them, so we don't believe they would have taken it into consideration when deciding to pursue CCJs.
If everything about obtaining a CCJ is bad for a lender, why do they do it?
Well, unfortunately, the alternative is worse. If a lender gets a reputation for not dealing with borrower defaults harshly, borrowers will stop making repayments on time. After all, if there is no downside to skipping a repayment or two, why wouldn't everyone just do it? Lenders are in a tricky situation, they don't want to pursue CCJs because of the costs involved, but can't just ignore them either because borrowers wouldn't make an effort to make repayments on time.
It's ironic because Wonga got some of the worst press out of any company over the last 50 years, yet they couldn't explain that they never pursued any debt as far as the court system.
Is it possible that Wonga never gave anyone a CCJ?
While Wonga would have destroyed a few credit records over its 12-13 years of lending, it is our belief that the claim "Wonga never gave anyone a CCJ" is not just credible, but highly likely. Most of their customers were borrowing less than £750, so there is certainly truth in the fact that Wonga would have likely had to spend more on applying for a CCJ than the loan was worth. Most of their customers wouldn't have had any assets for the court to force them to sell.
We've certainly never come across anyone who got a CCJ from Wonga, and there are no stories on the internet of anyone saying that Wonga gave them a CCJ."
The Reward - £500
Quick Loans is one of the financial providers that believes the story is true and that Wonga never gave anyone a County Court Judgment (CCJ).
We are so confident in this belief that we are willing to offer £500 to the first person who can provide us with evidence that they, or someone else, received a CCJ for not making repayments on a Wonga loan.
Ideally, this evidence will take the form of a letter from the court informing the person that they, or someone else, received a CCJ. The first person to send us this evidence will receive a £500 reward deposited into their bank account.