June 30, 2014

Fake letters scandal spreads to Student Loans Company

Graduates falling behind on debt repayments were sent threatening letters from what appears to be an independent debt collection agency – but is in fact a pseudonym for the Student Loans Company.

The revelation is awkward for Vince Cable, given that the quango falls under the remit of the Liberal Democrat business secretary, who vigorously advocates high standards in the business world.

It emerged as Wonga, the payday lender, faced the possibility of a police investigation after it was found to have sent letters from fictitious law firms pressuring customers to repay their debts.

The City of London Police said on Friday that now an agreement had been reached under which Wonga customers would be compensated for the practice, it would “reassess” whether a criminal investigation would be appropriate.

Britain’s biggest payday lender was this week ordered to pay at least £2.6m in compensation to tens of thousands of customers who received the letters.

The FT can disclose that the Office of Fair Trading intervened earlier this year to ask the Student Loans Company to change the wording on its letters because they were potentially misleading.

Letters to indebted graduates had been sent with a masthead from an agency called “Smith Lawson & Company Recovery Services”, as highlighted by the Buzzfeed news site.

Some letters used phrases such as, “We are instructed by our client”, which appeared to indicate that Smith Lawson is an independent firm. There was also a Smith Lawson email address. Phone calls on Friday to the business were met with a voicemail that did not refer to the Student Loans Company.

Only in the small print at the bottom of the letters did it say that this was a trading name for the government body. The organisations share the same registered address in Bristol.

Earlier this year the OFT – which has since been folded into a new regulator – intervened to get the SLC to change the wording of the letters. “The letters . . . are no longer issued by SLC, having been revised following discussions with the OFT earlier this year,” the quango said. “This includes reference to the word ‘client’ in communications.”

Many graduates, after receiving the letters, expressed their fears online that their debts were in the hands of an independent collection agency – unaware that Smith Lawson was merely a pseudonym for the not-for-profit government agency.

The SLC said it introduced Smith Lawson as a “cost-saving exercise” because the use of conventional debt collection agencies required the payment of commission. Asked why the SLC did not issue the letters under its own name, the agency replied: “The use of a secondary brand is part of SLC in-house recovery process, all letters issued in the initial stages of recovery are all branded Student Loans.”
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On Friday evening, the City of London Police said that it had met with the Office of Fair Trading in March last year to consider the Wonga matter. It was decided at that time that the OFT should pursue its investigation.

“Now that the regulator’s investigation has concluded, and a compensation agreement has been reached with Wonga, the City of London Police will reassess whether a criminal investigation is now appropriate,” the force said in a statement.

A spokesperson for Wonga said: “Our focus is on compensating customers who received the unacceptable historic debt collection letters."

The above statements do not represent those of Weston Legal or Michael Weston and they have not been reviewed for accuracy. The statements have been published by a third party and are being linked to by our website only because they contain information relating to debt. Nothing in this article should be construed as legal advice given by Weston Legal or Michael Weston. To view the source of the article, please following the link to the website that published the article. Articles written by Michael W. Weston can be viewed here: To report any problem with this article please email



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