Commenting on the release of a promotional film for legal loanshark Wonga today, Stella Creasy MP Labour’s shadow minister for Competition and Consumer Affairs said;
“Wonga may be able to find twelve people to say they are happy customers, I can find 1200 who are not and who are now paying the price for borrowing from these legal loan sharks. They like to claim they are different from other payday lenders, but the truth is they are all as bad as each other. That isn’t my review, but the outcome of the Office of Fair Trading investigation which found the entire payday lending industry in Britain was out of control. That’s why they have written to 50 legal loan sharks including Wonga about their behaviour. If Wonga really want to be transparent about how they make a million pounds a week from lending to hard pressed Brits, they should own up to being warned by the OFT and spell out what they are doing to put that right, rather than filling our cinema screens with such fiction.”
“Families struggling with the cost of living crisis need protection from their propaganda. It’s bad enough that you can buy a Wonga babygrow at the football clubs they sponsor. Parents taking their children for a well deserved night out at the flicks don’t want their kids subjected to this toxic marketing – I hope at the very least those screens that do show this film give it an 18 rating to reflect the potentially harmful nature of this footage.”
“The real story here is Britain’s broken consumer credit market- The Government may be happy to go along with this fiction but we are not. Only Labour is committed to reforming this industry by introducing caps on the cost of credit to limit the debt these loans can cause and making consumer credit work for everyone.”
1. The Office of Fair Trading referred the entire payday lending market to the Competition Commission in June this year following a review into compliance with its responsible lending guidance
- You can view the report in full by visiting the OFT website
- Half (48%) of payday loan users have taken out credit that it turned out they couldn’t afford to repay
- A third (29%) of payday loan users have taken out credit that they knew they couldn’t repay and in the last 12 months of 2012, more than half (57%) of people with payday loans missed a payment and incurred charges because of missed of bounced repayments.
- The Office of Fair Trading referred the market to the CC for investigation in June this year. The CC is now carrying out its own comprehensive investigation, to see if there are any features of this market(s) which prevent, restrict or distort competition and, if so, what action might be taken to remedy them. For more information visit the competition commission website.
2. The Financial Conduct Authority has published its proposals for consumer credit lenders in the FCA rulebook – you can find out more about the proposals in full by visiting the FCA website.
- The consultation closes on the 3rd December 2013 and you can take part by reading the proposal document by visiting the website.
- Martin Wheatley from the FCA has said the regulator is looking at a total cost cap but currently does not have the market data to assess where to place the cap level.
4. The Sharkstoppers campaign pack contains campaign ideas for making local communities legal loanshark free zones – It can be downloaded from Stella Creasy’s website and has been circulated to campaigners across the country. You can download the pack by clicking here
5. Stella Creasy MP has been campaigning for caps on the cost of credit since 2010 and now leads on the issue as part of Labour’s shadow Business, Skills and Innovation team. You can find more details on the Sharkstoppers campaign here. For more information visit Stella Creasy MP’s website at www.workingforwalthamstow.org.