Wonga announces record profits – but should they have them?

Carl Packman asks if we can be comfortable living in a country where Wonga makes millions.

Wonga – the controversial payday lender – has today announced record profits of £63m for 2012, or roughly £1m per week. More evidence that as financial hardship tears through many families in the UK, selling expensive loans to hard-up people is a growth industry.

Last year PwC noted in a report that between 2008 and 2010 mainstream banks lent around 50 per cent of the total stock of consumer credit. This represented a drastic cut back, despite the fact that wages were declining in this period and the small occurrence of a financial collapse.

These years were not good for borrowers on two counts: firstly it was harder to obtain credit, and second more people were unable to see their wages out to the end of the month.

While Bank of England data reveals that consumer credit has risen in recent times by 3.5 per cent, it does not follow that mainstream banks have returned to providing for local communities again. Another report by CityWire shows that some 52 per cent of the total stock of credit lent comes from "other" financial institutions – the main one being payday lenders.

It is no wonder Wonga have recorded massive profits – we live in the Wonga age.

But is it their fault? Certainly we cannot blame the company for bank failings, the rising cost of living, and declining wages, things over which they can have no effect. But they do control the way in which they sell their loans.

Reports abound of Wonga selling loans to people whose financial situation means that the last thing they need is high cost credit. I wrote in these pages about Susan, the unemployed nurse who was granted several loans by the company to pay for bills and food. At no point was she signposted more affordable alternatives or given debt advice by the payday lender.

Wonga themselves point out that they use a very sophisticated algorithm to determine who it is reasonable to lend to. But it seems there are some deep flaws with this system. This is Money earlier this year reported having spoke to 50 people who had had loans taken out of their accounts – despite those people not having applied for loans themselves. 

To illustrate how much of a problem this could be, aside from potentially losing money and the hassle, This is Money spoke to Adrian Anderson, director of mortgage broker Anderson Harris, who pointed out that: “if [a] loan is taken out fraudulently and subsequently not repaid, this will be seen as a black mark on your credit file and could affect your ability to get a mortgage.”

The image that Wonga present of themselves is different to that of independent pollsters. The company boast that they have a great customer satisfaction record, however YouGov recently surveyed some of its borrowers and found that they scored worse than Ryanair.

Interviewing at random 89 borrowers, 24 per cent were satisfied, 41 per cent dissatisfied, and 35 per cent neutral.

Wonga are, indeed, a consequence of the deleterious financial situation in the UK, rather than a cause of it. No one would deny this. But their loans don't help the personal finances of many vulnerable today. They say they turn many people away. Perhaps true, but should they warn more people of the dangers of using their product? I say yes. In addition to financial health warnings being put on their adverts, I'd like to see Wonga advertising the services of ethical lenders such as credit unions – who are better placed to serve those financially vulnerable people in hock to them.

So now Wonga have made all that money, should they keep it? Far be it from me to tell a private company what to do with its money, but maybe they could offer some to the Church of England who, along with the archbishop of Canterbury Justin Welby, are busy making the case and building up the presence of credit unions. Though really I would prefer to see the company make less money in the future – after all, nobody should be comfortable with the idea of firms profiting from poverty. It may be legal, but is it right?

A payday lender in Brixton. Photograph: Getty Images

Carl Packman is a writer, researcher and blogger. He is the author of the forthcoming book Loan Sharks to be released by Searching Finance. He has previously published in the Guardian, Tribune Magazine, The Philosopher's Magazine and the International Journal for Žižek Studies.
 

Getty
Show Hide image

What David Hockney has to tell us about football

Why the sudden glut of blond footballers? A conversation I had with the artist back in 1966 gave me a clue. . .

In 1966, I went to interview David Hockney at a rather run-down flat in Bayswater, central London. He was 28 and had just won a gold medal at the Royal College of Art.

In his lavatory, I noticed a cut-out photograph from a newspaper of Denis Law scoring a goal. I asked if he was a football fan. He said no, he just liked Denis Law’s thighs.

The sub-editors cut that remark out of the story, to save any gossip or legal problems. In 1966 homosexual activity could still be an offence.

Hockney and a friend had recently been in the United States and had been watching an advert on TV that said “Blondes have more fun”. At two o’clock in the morning, slightly drunk, they both went out, bought some hair dye and became blond. Hockney decided to remain blond from then on, though he has naturally dark hair.

Is it true that blonds have more fun? Lionel Messi presumably thinks so, otherwise why has he greeted this brand-new season with that weird blond hair? We look at his face, his figure, his posture and we know it’s him – then we blink, thinking what the heck, does he realise some joker has been pouring stuff on his head?

He has always been such a staid, old-fashioned-looking lad, never messing around with his hair till now. Neymar, beside him, has gone even blonder, but somehow we expect it of him. He had foony hair even before he left Brazil.

Over here, blonds are popping up all over the shop. Most teams now have a born-again blondie. It must take a fortune for Marouane Fellaini of Man United to brighten up his hair, as he has so much. But it’s already fading. Cheapskate.

Mesut Özil of Arsenal held back, not going the full head, just bits of it, which I suspect is a clue to his wavering, hesitant personality. His colleague Aaron Ramsey has almost the full blond monty. Paul Pogba of Man United has a sort of blond streak, more like a marker pen than a makeover. His colleague Phil Jones has appeared blond, but he seems to have disappeared from the team sheet. Samir Nasri of Man City went startlingly blond, but is on loan to Seville, so we’re not able to enjoy his locks. And Didier Ndong of Sunderland is a striking blond, thanks to gallons of bleach.

Remember the Romanians in the 1998 World Cup? They suddenly appeared blond, every one of them. God, that was brilliant. One of my all-time best World Cup moments, and I was at Wembley in 1966.

So, why do they do it? Well, Hockney was right, in a sense. Not to have more fun – meaning more sex – because top footballers are more than well supplied, but because their normal working lives are on the whole devoid of fun.

They can’t stuff their faces with fast food, drink themselves stupid, stay up all night, take a few silly pills – which is what many of our healthy 25-year-old lads consider a reasonably fun evening. Nor can they spend all their millions on fun hols, such as skiing in the winter, a safari in the spring, or hang-gliding at the weekend. Prem players have to be so boringly sensible these days, or their foreign managers will be screaming at them in their funny foreign accents.

While not on the pitch, or training, which takes up only a few hours a day, the boredom is appalling, endlessly on planes or coaches or in some hotel that could be anywhere.

The only bright spot in the long days is to look in the mirror and think: “Hmm, I wonder what highlights would look like? I’ve done the beard and the tattoos. Now let’s go for blond. Wow, gorgeous.”

They influence each other, being simple souls, so when one dyes his hair, depending on where he is in the macho pecking order, others follow. They put in the day by looking at themselves. Harmless fun. Bless ’em.

But I expect all the faux blonds to have gone by Christmas. Along with Mourinho. I said that to myself the moment he arrived in Manchester, smirking away. Pep will see him off. OK then, let’s say Easter at the latest . . . 

Hunter Davies is a journalist, broadcaster and profilic author perhaps best known for writing about the Beatles. He is an ardent Tottenham fan and writes a regular column on football for the New Statesman.

This article first appeared in the 22 September 2016 issue of the New Statesman, The New Times