File photo dated 16/12/12 of the website of payday loan company Wonga. Controversial payday lender Wonga is expected to report a sharp fall in profits when it publishes its full-year results today. PRESS ASSOCIATION Photo. Issue date: Tuesday September 30, 2014. The firm, which has been attacked by MPs for charging interest rates of over 5,000%, is forecast to post annual profits of about £50 million for 2013 compared with £84.5 million the previous year, according to Sky News. The slump in profit is reported to have come from difficulties at its overseas and small business operations. See PA story CITY Wonga. Photo credit should read: Dominic Lipinski/PA Wire

A criminal investigation into whether Wonga deceived customers by sending fake letters from lawyers in an attempt to collect debts has been ruled out because of insufficient evidence.

The City of London Police said on Thursday that it found the majority of letters sent from the payday lender contained small print stating they were actually from Wonga.

In a separate move, Wonga’s legal vice president Justin Hubble, who joined the firm in early 2014, has left the company after less than a year in the role.

The payday lender was forced to compensate thousands of customers last year after it sent them letters apparently from fictitious law firms demanding they repay their debts.

The lender agreed to pay at least £2.6m in compensation to 45,000 borrowers for sending letters from firms named “Barker and Lowe” and “Chainey, D’Amato and Shannon”.

The Office of Fair Trading, the former regulator, flagged the issue to the City of London Police, while a number of MPs, including Stella Creasy, believed these debt collection practices were “potentially a criminal matter”.

However, the City of London Police said in a statement: “The central allegations were that Wonga had deceived its customers by sending letters falsely purporting to be from lawyers with the aim of recovering outstanding debts from customers.

“After a thorough review of all the material gathered the City of London Police has concluded there is not sufficient evidence to progress a criminal investigation.”

The Police found the letters did not explicitly claim to be from separate and distinct companies, and that they requested the repayment of lawful debt, factors that undermined the case for a criminal investigation.

Wonga customers were collectively charged £400,000 in “inappropriate fees” for receiving letters that appeared to be from law firms, resulting in an average of about £9 per person.

The payday lender said it would refund the cost of the letters, along with interest, and would pay affected customers £50. It also confirmed it had stopped the bad debt collection practices voluntarily in 2010.

Other companies have been embroiled in similar fake letter scandals. Lloyds Banking Group admitted it sent debt collection letters appearing to be from independent firms, even though they were actually in-house lawyers.

The Student Loans Company also sent debt collection letters to students in arrears, which appeared to be from an independent firm but emanated from SLC itself.

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