Graduates Sent Fake Letters By Student Loans Company Could Receive Compensation

"Wonga-style" letters were sent from a fake debt collection agency. But the practice has now stopped thanks to BuzzFeed.

The chairman of the Student Loans Company has "apologised unequivocally" for sending threatening letters to former students from a fake debt collection agency, after BuzzFeed revealed the existence of the practice.

Student Loans Company

Christian Brodie, who was appointed chairman of the Student Loans Company earlier this year, is now facing calls to resign over the scandal, which saw the loans business send threatening letters to graduates from an apparently independent debt collection agency called "Smith Lawson and Company".

In reality Smith Lawson and Company was just a pseudonym for the Student Loans Company, itself a not-for-profit company controlled by the government. The two even shared the same initials.

The scandal follows the revelation that payday loans firm Wonga agreed to pay £2.6 million in compensation after sending letters from a fake legal agency to customers.

A government spokesman said Liberal Democrat business secretary Vince Cable called the Student Loans boss on Thursday afternoon. Cable told Brodie that the practice is "not acceptable" while reaffirming the "severity of the issue".

In return Brodie promised an internal review and said the letters will never again be sent to former students who have not kept up their repayments, according to the government spokesman.

Meanwhile, a member of the House of Lords today called for Brodie to resign on a point of principle, while another said graduates who received the letters should be compensated.

Johnny Green/PA

Lord Phillips of Sudbury told the House of Lords that Christian Brodie should resign over the issue: "This is straightforward deceit. If any student were engaged in deceit of this nature he or she would be thrown out of their university or denied a job prospect. Surely we must start to set an example. At least the chair of the Student Loans Company should resign from his or her position."

More than 300,000 of the letters were sent to graduates between 2005 and 27 June this year, when BuzzFeed published its original story.

Lord Stevenson of Balmacara told the Lords that former students who received the letters should "receive redress" and be compensated: "When similar practices were undertaken by Wonga we learnt that it was going to make redress to those affected by letters of this type, in significant amounts of money."