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Anger at Wonga's 'vulture capitalism'

Unite | Unite

2 min read Partner content

The country's biggest trade union has accused payday loan company Wonga of preying on the financially vulnerable.

Today the company announced profits of more than £1 million a week.

Wonga, which offers short-term loans to more than a million customers, said profits after tax rose 35% to £62.5 million during 2012 - the equivalent to more than £1 million a week. It lent £1.2 billion in the year, a rise of 68%.

The Uniteunion said it is "angry that much of the so-called economic recovery and boost in consumer spending is being fuelled by payday lenders".

Unitegeneral secretary Len McCluskey said: “The fact that Wonga’s profits rose to £62.5 million in 2012 urgently reinforces the need for legislation to curb payday lenders and also for a Treasury select committee probe into this industry.

"Ted Heath once spoke of the unacceptable face of capitalism – what we are seeing in 2013 is vulture capitalism, picking wallets and purses clean.

“We urgently need the legislation being promoted by MP Paul Blomfield - the High Cost Credit Bill - but thanks to Tory blocking tactics it has been delayed."

Blomfield’s bill aims to reduce prime time advertising of payday loans; require lenders to contribute towards debt advice and place a duty on the new Financial Conduct Association (FCA) to better use existing law to control bad lending and debt collection practices.

A survey of Unitemembers revealed that those using payday lenders are borrowing around £326 per month to get by, the equivalent of one week's wages.

Errol Damelin, Wonga founder and chief executive, said: "Access to practical and affordable sources of credit is a big issue for our society and Wonga is playing a part by lending responsibly, and at scale, to people who can generally afford to pay us back quickly."

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