A disabled teenager killed himself on the same day that the payday loans company Wonga cleared out his bank account, it has been revealed.

An inquest heard that Kane Sparham-Price, 18, from Ashton-under-Lyne, Greater Manchester, had “numerous problems including those connected with his mental health” and spent much of his life in foster care and care homes.

The teenager took out loans through Wonga’s website after he turned 18 and left local authority care. He was found dead in February 2013 after the loans company took payments for his debts under the terms he had signed up to, leaving his bank account empty.

There is no suggestion that Wonga acted unlawfully or was aware it had left Sparham-Price penniless, but a coroner’s report, which has recently been unearthed, called for a change to payday loan rules to prevent similar deaths in the future.

John Pollard, the senior coroner for south Manchester, said in the report, which was uncovered by Disability News Service last week: “He was left with no money in his account and no means of borrowing any more. Whilst I accept that the various payday lenders are legally entitled to ‘clear out’ someone’s bank account if money is owing to them, it struck me that there ought to be a statutory minimum amount which MUST be left in an account (say £10) to avoid absolute destitution; and as I understand you set and regulate the rules, you might look at this with a view to preventing further deaths.”

The report was sent to the Financial Conduct Authority 12 months ago. In the FCA’s response last October, the chief executive, Martin Wheatley, said introducing such changes would be “undesirable” because it would include the potential for breaching a customer’s privacy, as well as the possibility of incurring extra bank charges if a payment was refused.



Wheatley added, however, that the FCA had already taken action to restrict continuous payment authorities (CPAs) as part of new rules on payday loans. This meant that lenders such as Wonga were no longer allowed to make more than two attempts to use a CPA to take a repayment or use a CPA to take a part-payment, as in the case of Sparham-Price.



He said: “We found that some lenders were using CPAs as a debt collection method and that some consumers were left in significant difficulties and unable to pay for essentials such as food and heating.



“This restriction should mitigate the likelihood of lenders ‘clearing out’ a consumer’s account, as payment will only be taken where the amount can be taken in full.”



In a statement, Wonga said: “We were sorry to hear of the tragic death of Mr Sparham-Price. We take our responsibilities to our customers very seriously and we have strict lending criteria in place.



“We conducted a full review of this case at the time to confirm we acted according to regulatory guidelines and to continue to improve our engagement with customers.”

Wonga agreed with the FCA in October to make “significant” changes to its business because it was “not taking adequate steps to assess customers’ ability to meet repayments in a sustainable manner”. This meant that hundreds of thousands of Wonga customers subsequently had their outstanding loans written off.

• In the US, the National Suicide Prevention Hotline is 1-800-273-8255. In the UK, the Samaritans can be contacted on 116 123. In Australia, the crisis support service Lifeline is on 13 11 14. Hotlines in other countries can be found here.

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