While Wonga may not be at the most aggressive end of the payday loan spectrum, its “in-your-face” approach has made it the face of the post-crisis explosion in high-cost consumer credit. The volume of payday loans, designed to tide the borrower over to the next pay cheque, more than tripled in the UK between 2007 and 2013 as the economy soured and mainstream banks withdrew from riskier areas of consumer credit.
The growth in such lending may be a classic post-bubble phenomenon, and the less well-off do sometimes need access to short-term credit to deal with unexpected shocks, but most people are made understandably uneasy by the idea of encouraging those of slender means to borrow expensively to finance elective consumption. Against this background, calls for tighter regulation have fallen on fertile ground.
As the sector’s most visible lender, Wonga has become a focus for public disapprobation. Justin Welby, the Archbishop of Canterbury, has condemned Wonga for usurious practices and called for it to be competed “out of existence”….