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Wonga should be regulated out of existence

loan-sharkThe payday lender Wonga should be investigated by the police for sending threatening letters from non-existent law firms ‘Barker & Lowe’ and ‘Chainey, D’Amato and Shannon’ in order to pressurise their victims into repaying their debts.   It is certainly not sufficient that Wonga has been forced under pressure to repay the 45,000 customers affected, when the compensation works out at only around £50 per customer.   Worse still, Wonga charged the recipients of these fake legal letters an average of £9 each, a further total of £400,000 extracted by this rapacious firm for fabricated reasons.   It’s true that Wonga is making these paybacks with interest, though the interest rate offered, at 8%, turns out to be rather less than the 5,853% ‘representative’ rate that Wonga themselves advertise on their website for their own loans.

It is outrageous that Wonga has been allowed to get away with it for so long.   It was founded in 2006 when the Office of Fair Trading was in charge, a regulatory body that was virtually useless.   The relevant body today is the Financial Conduct Authority (FCA), but because it cannot apply its powers retrospectively, it can’t fine Wonga nor revoke its licence – actions which would likely have been implemented if Wonga were a regulated lender.   The FCA however is now at last tightening up the regulations, and up to half of the UK’s 240 payday lenders have now left the market in the last 18 months.   The FCA has limited (though not fully withdrawn) the ability of payday lenders to access customers’  bank accounts to reclaim debts.   It has also restricted the number of times that loans can be rolled over (triggering fees, of course) when borrowers miss repayments.   Most significantly of all, it is now proposing to cap the cost of credit which will make it a lot harder for payday lenders to operate on their current model.

Of course Wonga is not the fundamental cause of the impoverishment that drives hundreds of thousands of persons and families in Tory Britain to seek loans at extortionate rates of interest.   The real cause is the prolonged austerity continuing to squeeze down wages combined with huge cuts in essential benefits and public services.   But Wonga is a parasite preying on the consequences of this brutal and unnecessary economic policy, and further incisive regulation by the FCA should make it impossible for the company to continue gto operate on present lines, and thus close it down.   It purports to be offering a service, but it is actually inveigling the poorest into ever deeper debt from which they cannot escape, and it is time this scab on the body politic of Britain was scraped away.

One Comment

  1. Robert says:

    I needed a short term loan and now banks are refusing to give money to the sick the disabled with a nationwide blanket ban, where do you expect us to go to. I love people who are Millionaires telling the poor ah yes we are looking after you, so we will stop you have a life.

    Dear god you people.

    Make the law and the banks loan to people and I will agree until then I will get money as and where I can.

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