All the facts haven’t come out yet.  But the headlines last week (on BBC News) suggest that Wonga chased pay-day loans in arrears using fake law firms, according the City watchdog Financial Conduct Authority (FCA).deceit

It’s not entirely clear yet as to exactly what was going on. Wonga say that the tactic ended 4 years ago. They have agreed to compensate as many as 45,000 borrowers by paying £2.6m in compensation after sending letters from non-existent law firms to customers in arrears. Perhaps it won’t cost Wonga £2.6m because it all depends on people coming forward and claiming money from Wonga or Wonga itself pro-actively finding them. It works out to an average of only £58 per borrower so it’s small beer and is hardly likely to cause mass legal actions for recovery.

On legal actions, the BBC article says Wonga threatened legal action against these 45,000 borrowers, but the law firms they mentioned were false. Also false were the legal costs that Wonga added to customers’ accounts. The letters had bogus letterheads claiming they were from firms with exotic names such as “Chainey, D’Amato & Shannon” and “Barker and Lowe Legal Recoveries”. No such businesses existed.

Apparently there’s no fine, at least at present, because these shameful, deceitful tactics took place before the FCA took over regulation, so it has no power to levy a fine against Wonga.

It seems very strange that the predecessor watchdog, the Financial Services Authority (FSA), and the Government didn’t bother to ensure that past misdeeds of companies in the financial sector (whether brought to light or not at the time) were automatically novated for action to the FCA. Actually, the original investigation into Wonga dealings was started in 2011 by the Office of Fair Trading (OFT) but they are no more: The OFT was responsible for protecting consumer interests throughout the UK but it closed on April Fool’s Day 2014, with its responsibilities passing to a number of different organisations including the Competition and Markets Authority (CMA) and the Financial Conduct Authority.

Now, the City of London Police have confirmed they will re-consider opening a criminal investigation into Wonga.  Previously they had ruled it out, saying the case should be left to the regulator – but which regulator: The FCA, the OFT or the FSA? It all sounds a bit like musical chairs – but a game played without chairs or responsibility. Not very good conduct at all.

Also, it’s not clear what stance the Law Society is going to take. We don’t know whether the letters from non-existent law firms came from lawyers or solicitors.

It is a criminal offence to claim to be a Solicitor or Barrister and it seems that fraud arises if money is charged – as Wonga appears to have done. ‘Lawyer’ as such is not defined anywhere in the Legal Services Act 2007 and Solicitors Act 1974 and therefore there are no restrictions on who can, and can’t, call themselves one.

This morning, Tim Wallace writing on City A.M. said that “Wonga staff or ex-employees could face prison if the police investigation into the payday lender leads to successful prosecutions, after lawyers demanded a probe into the firm.”



Company directors can be disqualified under the Company Directors Disqualification Act 1986 if their conduct falls below accepted standards. Someone, somewhere at Wonga orchestrated the tactic of which the company is accused.  Surely, that strategy must have been approved at board level.  Maybe someone, somewhere should be considering action under the Company Directors’ Disqualification Act.

What is worrying is that financial honesty seems to be something from a bygone age and institutionally low standards of integrity and probity prevail.


It’s not just a UK-thing either. The French seem to have been at it too. Over the weekend we learned that the boss of BNP Paribas, France’s largest bank, has written to staff warning that the company will be fined heavily by US authorities. Reuters report that the U.S. Justice Department is expected to announce a settlement with the bank involving a record fine of nearly $9 billion (£5.28 billion) over alleged U.S. sanctions violations by the bank, sources familiar with the matter said. On the plus side, The Financial Times and New York Times also report that the bank will, unusually, admit guilt.

Today, Jenny Forsyth writing on City A.M. says that BNP Paribas has negotiated terms to water down the fine it is expected to be handed today and has won a six-month stay of execution on its suspension from clearing US dollar transactions, according to the Financial Times.

Dark Pools – is there murky water at Barclays?

(Just so you know, which I’m sure you do anyway, a dark pool, AKA black pool or dark pool of liquidity, is a private ‘club’ or forum for trading securities that is not openly available to the public.)

Today’s papers see reports that Barclays is accused of marketing its dark pool as a safe haven for investors, away from the predatory actions of high frequency traders and others – when in fact, it is alleged, the bank encouraged those traders onto its platform.  Barclays is understood to have hired law firm Wilmer Cutler Pickering Hale and Dorr to investigate the matter internally.

Worrying isn’t it? But who do you trust these days? Banks, Lawyers, Accountants, Politicians? – When you know the answer could you let me know.

Martin Pollins
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