Welcome to the Usury Kingdom – Sponsored by Wonga


With wages falling, costs rising, and social safety nets being torn asunder – UK citizens are turning, in ever greater numbers, to pay day lenders to plug the gap. In the past, the poor were protected from predatory lenders by Usury Laws which made extortionate interest rates illegal.  Yet in today’s Usury Kingdom, crime pays.

The Rise in Personal Debt

In the ten years between 1999 and 2009, the annual salary rose 13.6%.  During the same period, house prices went up 130%, a loaf of bread went up 147%, and a litre of petrol went up 42%.  This goes some way to accounting for the fact that personal debt rose during this period by 158%.  Access to credit created consumer demand which concealed the gap between wage and cost of living inflation.

In the last five years, wages have increased by just 10%The UK Essentials Index which focuses on the kinds of everyday items which the UK’s working and non-working poor buy showed an inflation rate of 33% during the same period. This means that for the poorest working people, their wages are worth 20% less than they were back in 2008.

Pay Day Lenders and Usury

Usury is the crime of charging an unethical level of interest on a loan.  Pay day loans are typically between £50 and £1,000 over an intended loan period of a month (you pay the loan back on payday).  The biggest payday lender, Wonga, charges 4,215% on its loans.  If a lender took out £100 and took 3 months to pay it back, they would owe a massive £1,065.  If they had struggled to find the £100 it is highly unlikely they would be able to find over £1,000.  By six months, they would owe £2,107 and by the end of a year £4,215.  This is Usury.

The Office of Fair Trading (OFT) recently wrote a letter to all 240 payday lenders over ‘emerging concerns’ about poor practice within the market. David Fisher of the OFT said:

“We have uncovered evidence that some payday lenders are acting in ways that are so serious we have already opened formal investigations against them. It is also clear that across the sector lenders need to improve their business practices or risk enforcement action.

“I would urge anyone thinking about taking out a payday loan to make sure they fully understand the costs involved so they can be sure they can afford to repay it.”

The market has since run on, unabated.  A recent Which? survey of payday loan customers revealed some damning results.

  • 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.
  • In the last 12 months, more than half (57%) of people with payday loans have missed a payment and have incurred charges because of missed or bounced repayments (56%).
  • Almost a third (31%) were hassled by debt collection agencies in the past 12 months.
  • One in five (20%) have been hit with unexpected charges.
  • Seven in 10 (69%) payday loan users say they have regretted taking out a loan or other credit product in the last year.
  • A quarter (27%) of payday loan users have sought debt advice in the last 12 months compared to just 5% of users of any credit product.

These pay day loans were being taken out mostly to pay for food and fuel (34%), regular bills (32%) and to repay other debts (24%).

The fact is, an increasing number of payday lenders are now becoming the first stop of the poor.

For a desperate person, this appears a satisfactory temporary fix – no background checks, no security, no endless processing at the benefits office.  Do individuals bear responsibility for their indebtedness? Of course.  But desperate people often make poor decisions.  The question here is, do we really want to create a growth industry exploiting desperate people?

Payday Lenders Turning the Screw


The number of people seeking help with payday loan repayments has increased 300% in the last two years alone, according to the StepChange Debt Charity.  In 2010, a little over 7,000 people approached the charity for help with repaying these high cost loans. Last year, more than 30,000 came seeking help.  It is little wonder, given the increasingly aggressive behaviour of the lenders.

Wonga recently issued letters to customers struggling with repayments warning them that they could be guilty of committing fraud and that Wonga would contact the police if they did not act as requested.  The OFT threatened the firm with a £50k fine is it sent out any more of the letters.

MCO Capital was fined £544k and had its consumer credit license revoked last year for failing to perform identity checks on loan applications, allowing fraudsters to borrow millions in the names of 7,000 individuals.  However, MCO Capital continues to trade at a new website www.paycheckcredit.co.uk – with an average interest rate of 5,420%.

Usury is not a Victimless Crime


It is widely acknowledged that debt has an impact on mental health, and mental health issues can have an impact on a person’s likelihood to become indebted.  Spiralling debt and the fear of debt propel people to make poor decisions which can limit and end their lives.  A survey of people in debt by debt charity StepChange, revealed 78% reported that being in debt had reduced their self-confidence and faith in their ability to take care of their family.

36 year old father Antony Breeze died after setting himself on fire in public last October.  He told a witness he’d ‘had enough’ of being chased relentlessly by debt collectors over a £1,600 debt, mostly from payday lenders.  He had been receiving threatening phone calls and letters, and had lost a stone in weight in the fortnight before his death.  The Coroner stated at the inquest into his death:

“His debts were not at a very high level, therefore I cannot understand why his debts would lead him to harm himself.”

The average wage for a coroner is £52,000 a year.  Antony Breeze was working six days a week as a driver earning around £17,000 a year.  Therefore his debts were enormous relative to his earning power – he would have needed to find the equivalent of almost two months take home pay to repay his debts, on top of paying his rent and other bills.

Antony Breeze is not an isolated incident.

Four months previously, a 48 year old man set himself on fire outside a Birmingham Job Centre after the government’s punitive fitness to work assessments saw him lose his benefits.

A homeless 18 year old poured lighter fluid over himself and set himself alight at a Torquay Town Hall after the office failed to house him.

A desperate dad took an overdose in response to his mounting debts.  Payday lender The Cheque Centre continued to pester him on his mobile phone and withdraw funds from his bank account while he lay in hospital, despite his wife contacting the firm to let them know the situation.

18 year old Oliver Scott took his own life by jumping in front of a train after running up thousands in debt with Wonga, Cash Genie and Tooth Fairy Finance in just a few months.

You Can’t Polish a Turd

Usury was made a crime for a reason.  Businesses can make a lot of money by issuing loans to desperate people at exorbitant interest rates.  They can make a larger profit by the borrowers being unable to pay back the loan, so it is in their interests to target people likely to encounter trouble making their repayments on time.

These businesses are allowed to appear as ordinary, respectable organisations – when they are no better than back alley loan sharks.

Campaigning Labour MP Stella Creasy said: “It shows how out of control these companies are and the damage they are doing in their quest for profits from hard-pressed families. Further rises in the cost of living next year will mean more people seeking credit.

“The Govern­ment can’t expect us to put up with this kind of sickening behaviour from these companies for another year.”

Indeed, we cannot wait another year to bring an end to the Usury Kingdom.

Take Action

Successful campaigning by charities and other groups has seen the issue of regulating payday lenders become a political issue.  You can join in by writing to your MP.

If you are reading this and suffering silently about your own debts, please do not remain suffering alone.  You can get help.  Please call StepChange – the call is free from all landlines and mobile phones on 0800 138111.

Note of Thanks: Annie Maclean kindly donated the title of today’s blog.

14 thoughts on “Welcome to the Usury Kingdom – Sponsored by Wonga

  1. Pingback: Welcome to the Usury Kingdom – Sponsored ...

  2. Has there been any attempt to get the advertising of payday lenders banned? I believe their presence on TV allows a credibility that they don’t deserve and a campaign to get them banned would both highlight the damage they do and the associated outrage of adult wages not being enough for a family to live on.

  3. Reading all of the comments above, and others pertinent to the apparent intentions of government, the banks, big business, the judiciary etc. to put profit before care of the UK citizenry, our democracy and our country, is it no wonder that we now fall back on a belief that the much-maligned idea of a massive conspiracy occurring, can no longer be sneered at by those who think that such things do NOT happen in this country and that it is JUST a “theory”..?

    This government appears more focussed, day-by-day, on destroying our rights, withdrawing us from links with like-minded people across Europe, and returning us to the status of poorly paid serfs whilst destroying any vestige of sympathy that we once had for those less able to survive financially, or otherwise, than we – members of our own society, friends, neighbours, perhaps even family.

    The dreadfully sad part about all of this is that a massive number of people are allowing this to happen; stumbling into disaster heedlessly and turning against those that should be marching arm-in-arm with. WHEN will they learn..? When it is too late to turn back..? My mind quakes at the thought of what might happen during the next few years…

  4. And who is a major player in Wonga? Yes, it’s Adrian Beectoft, the man whose donations to the Tory Party give him the right to compose influential policy documents. The Beecroft Report was basically a blueprint for a hiring and firing culture that would undoubtedly make employment more precarious, increase unemployment and generate a larger market for loan sharks. Oh.

  5. I’m just surprised this has become an issue now. When I see ad’s on TV I habitually read the small (very!) print at the bottom of the screen. The first Wonga ad I saw had, what at first I thought must be a mistake, an enormous APR – which wasn’t a misprint. With the economy going the way it is, and with this scummy governments policies, there are no real surprises that the smelly stuff is hitting the fan.
    It’s a pity that “Joe public” is so easily led by the nose and believes the crap put about by the government and the media, another own goal for the hard of thinking.

  6. OK, so someone is forced to make a choice between having food for the next week or having no food for the next week. How on earth is does that constitute an uneducated person making a wrong decision??

  7. Not so much a lack of financial education as a lack of political education. Set up a narrative about “scroungers”, start docking people’s benefits for little or no good reason, and – hey presto! …an indebted underclass who no means of fighting back while the usurers roll it and contribute to party funds no doubt ..

  8. We have a corrupt political system run by psychopaths. These people won’t understand the suffering of people who are desperate to borrow money at interest rate of 4,215%. There is not much else that I can say.

    I have contacted Stella Creasy about the Labour Party policies. She will only respond to uncontroversial issues.

  9. the OFT threatens to fine Wonga 50k for the letters it sent out – what else did it do. As you rightly say the effect of such behaviours on its clients can be devastating yet I suspect little or no action was taken to support them.

    All of this is happening at the same time as stringent cuts to advice services such as CABs, money advice etc as well as to enforcement authorities such as the OFT and TSD. So clients often have nowhere to turn. Combine this with workfare, ATOS, bedroom tax, stigma etc and the mix becomes toxic. Also the companies seem to almost left to regulate themselves.

    Another issue is the lack of any financial education so people do not understand the issues with interest rates etc or have the understanding to make informed choices. Working for TSD I have also had to educate the credit companies themselves on the requirements as well as fellow colleagues. There is a staggering lack of knowledge and misunderstanding on the regulations.

    • The lack of financial education in schools is a deliberate strategy. Not only do people not understand interest rates, the vast majority also don’t understand the banking system, the tax system, the pension system….

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