NEWCASTLE United sponsor Wonga has been accused of using its work with the club to normalise excessive interest rates.
Payday loan lenders such as Wonga came under attack yesterday as campaigners met on Tyneside.
Speakers at Newcastle’s Citizen’s Advice Bureau meeting were due to hear from Wonga’s head of global corporate affairs, but a late cancellation owing to a personal situation meant that one of the firm’s biggest critics was left to speak out unchallenged. Labour’s Stella Creasy has led calls for a cap on the total amount a person has to pay back as opposition grows to interest rates often in excess of 1,000% APR.
Ms Creasy said the firm had thousands of repeat customers who were effectively trapped in debt. Some, she told the meeting, were using the lenders to help pay mortgages.
“You can well imagine the interest payments on all that,” Ms Creasy said.
“The situation with payday lenders reminds me of the film Jurassic Park. In the scenes with the raptors we see that they are learning, they are adapting, and the same is true with these firms.”
Ms Creasy added: “Don’t be under any illusion that this firm wants to see Newcastle do well in the Premier League. What they are doing is trying to present themselves in a better light, they want to say to you, ‘See, we are just like Barclays and other big-name banks’.”
The London MP has been fighting for greater government control over the payday loan market, arguing that it is increasingly been used for everyday costs such as feeding children and paying for travel expenses.
She added: “Last year alone Wonga wrote off 49% of debt and still made £45m in profit. The reason for this is that around 50% of its revenue comes from repeat customers.”
The danger of this, the Labour MP said, is that it traps families into repeated loans. She wants to see a cap on this such as the one used in America and Europe.
Ms Creasy was speaking at Newcastle’s Dance City, where the citizen’s advice team were holding their annual general meeting, chaired by former leader of the city council Jeremy, now Lord, Beecham.
Staff and charities present were told the Newcastle branch has a £140,000 deficit as a result of Government cuts to support for benefits and debt advice.
A spokesman for Wonga said: “I have no idea why anyone would think we want to be viewed like a bank.
“We represent the future of financial services and our transparent, flexible and digital approach generates customer recommendation ratings that bank managers can only dream of.
“As we have previously stated, and as we will prove given time, we are absolutely committed to building a long-term relationship with Newcastle Football Club, the fans and the wider community.
“We have been involved in football for a number of years now, because both our staff and our customers are passionate about the game, and we are very excited and proud to be working with such a massive club.”