Student Loans Fake Law Firm

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http://www.telegraph.co.uk/education/educationnews/10936669/Ban-on-fake-Wonga-style-legal-letters-to-chase-student-debt.html

The Student Loans Company suspends the use of a fictional debt collection agency to chase up late graduate repayments after Vince Cable brands the system as "misleading"

The Student Loans Company has scrapped the use of “Wonga”-style tactics to chase graduates who fall behind on repayments amid claims hundreds of thousands of ex-students had been misled by the system.

Officials said the SLC had “suspended all use” of a fictional debt collection agency after the government branded the tactics “misleading”.

The move came as it emerged that around 309,000 ex-students had been sent letters from Smith Lawson and Company Recovery Services – which shares the same initials as the SLC – in the last decade.

In a statement, the company defended the system but agreed it would withdraw the letters.

Vince Cable, the Business Secretary, said the government had a duty to recover taxpayers’ money but insisted it must not attempt to “scare people into doing the right thing”.
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The changes were made following controversy over the use of similar tactics by the payday lender Wonga which was ordered to pay £2.6m in compensation after sending letters to thousands of customers from made-up debt collection agencies.

It later emerged that the SLC – a subsidiary of the government – had been using a fictional debt recovery firm to chase up graduates since 2005.

Today, Mr Cable criticised the approach, adding: "It is important that government recovers taxpayers' money that it is owed, but it must do so in a way that does not use tactics to scare people into doing the right thing.”

He said the SLC had agreed to stop sending “misleading letters to borrowers”, adding that they would be made “clearer in the future so those who took out student loans know who the letter is coming from”.

It had emerged that the SLC had been criticised by the Office for Fair Trading for the approach earlier this year. It was ordered to include a footnote in the letters pointing out that Smith Lawson was part of the SLC.

But in a statement today, the SLC said it had now “suspended all use of Smith Lawson branded correspondence”.

“The company had reviewed its Smith Lawson letters following discussions with the OFT in March 2014 and had agreed to implement their suggested changes," it said. "The issuing of any revised Smith Lawson correspondence has still to be agreed.”

The SLC also admitted that around 309,000 customers had been sent letters using the Smith Lawson brand in the last nine years.

Colum McGuire, vice president of the National Union of Students said: “The suggestion that many thousands of former students have received potentially misleading letters from the Student Loans Company is deeply troubling.

“There are now serious questions to answer as to how and why thousands of apparently unchecked letters were ever sent out to borrowers in the first place.”

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http://www.theguardian.com/money/2014/jul/03/student-loans-company-debt-collection-letters-compensation-wonga

The Student Loans Company is facing calls to compensate more than 300,000 graduates sent misleading "Wonga-style" debt collection letters, as it emerged that the business secretary, Vince Cable, is to meet the agency to question its tactics.

The letters, sent between 2005 and June of this year, purported to be from Smith Lawson and Company Recovery Services, acting on behalf of their government "client". In fact, the firm was merely a subsidiary of the Student Loans Company, which was only revealed in tiny print at the bottom of the letters.

Speaking in parliament, Lord Stevenson of Balmacara said that when similar practices were undertaken by the payday lender Wonga the firm agreed to make "redress to those affected by letters of this type with significant amounts of money".

"Will you confirm that all students who have been similarly affected in this way will also receive redress?" the Labour peer asked the government.