The Student Loans Company has suspended the use of letters headed with the name of a debt recovery firm that turned out to be its own trading name.
In echoes of the Wonga ‘fake law firms’ scandal, about 300,000 graduates are believed to have been sent letters branded Smith Lawson, giving the impression it was a separate company.
The letters, apparently from an agency called ‘Smith Lawson & Company Recovery Services’ had been in circulation since 2005 and some included phrases such as ‘we are instructed by our client’.
It has since emerged that the Student Loans Company (SLC) was subject to an Office of Fair Trading investigation in March which ordered a review of the correspondence.
It is the latest case to emerge involving a company sending misleading debt recovery letters, following last week’s news that payday lender Wonga had created two fake firms to issue legal threats to borrowers.
SLC has said it has suspended all use of Smith Lawson branded letters and developed new letters which removed reference to the company as a ‘client’. The new letters increased the font size of a footer saying ‘Smith Lawson & Company is a trading name of the Student Loans Company Limited’.
In a statement, SLC said: ‘The Student Loans Company has a duty to collect every pound that is owed, for the taxpayer.
‘The Smith Lawson collection process has been used since 2005 to support collection activities and was mainly used after the initial in-house collections process had been exhausted for customers who had persistently defaulted on their loan repayments and were in arrears for a minimum of three months.’
Meanwhile, the City of London Police will assess whether a criminal investigation into Wonga’s actions should take place.
In a statement, the police force said: ‘In March 2013, the Office of Fair Trading (OFT) met with the City of London Police to consider their (OFT’s) investigation into Wonga and whether it should be referred to the National Policing Lead for Fraud.
‘Now that the regulator’s investigation has concluded, and a compensation agreement has been reached with Wonga, police will reassess whether a criminal investigation is now appropriate.’
The Law Society and several MPs have called for a criminal investigation into Wonga, which will pay £2.6m to around 45,000 customers affected by the letters.