Wonga, the controversial high-cost, short-term lender, is planning to offer a wider range of financial services, including savings, this year.
Errol Damelin, co-founder of the company, said banks performed an important role in providing a safe place to deposit money and carry out transactions, but added: “We want to innovate around the edges of that and add value. We think we can. We think there are some places where technology can be used to deliver much better service.”
And, in a move that may alarm parents, Wonga is intending to get involved with improving financial literacy for children this year, doing something “innovative and educational” in a digital capacity, says Damelin.
“Kids need to know what all the credit alternatives are and equally they should know about saving.”
Wonga launched just over four years ago with one product – a short-term loan for consumers which could be approved within 15 minutes and delivered into the applicant’s bank account within half an hour. It
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The fans of 18 football clubs have called on their sides to stop carrying advertising by payday lender Wonga on their websites, and are encouraging the supporters of more than 60 other clubs to follow suit.
In a letter published in the Guardian, the football fans argue that while payday lenders are not conducting illegal business, “that is only because there are at present few if any laws restricting their activities in UK. Their practices would not be allowed in most other European countries, or in most of the USA.”
The fans, led by Northampton Town supporter Bob Ward and his grandson Dan, ask their clubs to seek sources of advertising revenue other “than earning money from the dubious activities of Wonga.com”, adding: “If they really wish to advertise short-term loans for their fans in these difficult financial times, then perhaps it would be better to give publicity to their local credit unions.”
Wonga is the highest profile of about 200 firms offering short-term, high cost loans which are the subject of an ongoing investigation by the Office of Fair Trading.
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Wonga says it prides itself on not using aggressive, targeting marketing, but ever since I applied for a Wonga loan, this message keeps returning to hover over my Gmail account inbox: “Payday Cash in 15 mins – Wonga.com/payday-loans – No Phone, No Fax, No Fuss. £400, Instant Decision – Apply Now!”
It’s a successful advertising investment because it’s become hard to avoid thinking about Wonga each time I check on my emails.
The company’s policy on extending loans from one month to the next is a key area where Wonga sets itself apart from other payday loan organisations. “W
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Thomas Bebb cranes his head out of his living room window to assess how many of his neighbours are unemployed. He counts the number of flats in this three-storey, brown-and-grey pebbledash block (12) and pauses to calculate how many contain people in work. There are two: a scaffolder and a nurse. Looking across the courtyard at two other blocks opposite and to the left, he can’t think of anyone with a job there either.
The high numbers of workless households on this estate help explain startling figures produced by the GMB last week revealing that nearly one in three households in Liverpool have no one in work. It is the legacy of historic industrial decline in this area, suddenly worsened by the recent round of public sector redundancies and a new, downturn-related disappearance of retail and manufacturing jobs.
For Bebb, who lost his short-term job as a parks gardener and grounds maintenance worker in November (because of cost-cutting by Liverpool city council, which is in the process of shaving 28% from its budget), the result is that he is living substantially below the poverty line.
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Up to 2 million people could be using payday loans, according to a report last week by the Association of Recovery Professionals (R3). On the back of this news, Labour MP Stella Creasy has called for more regulation of payday lenders and interest rate caps before Christmas.
The R3 report surveyed 2,005 people. Of these, 67 had experience of payday loans – just 3%. The report suggested that over the next six months, up to double that number could seek short-term finance, such as payday lending, to help them meet cash shortfalls. Much of the report, in fact, highlights the difficulties that ordinary households are facing in meeting the costs of paying off bank loans, credit cards and mortgages and coping with tax rises and benefit cuts.
A much more detailed report on the payday lending industry, users and regulation experience was produced last year by Consumer Focus. The report revealed that many people find payday loans convenient, with fund transfer almost instantaneous. U
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