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MP forces Wellcome Trust to justify Wonga investment

Stella Creasy MP
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MP forces Wellcome Trust to justify Wonga investment2

Finance | Vibeka Mair | 14 Jun 2011

Sir Mark Walport, director of the Wellcome Trust, has been moved to defend the charity’s recent investment in the online lender Wonga after being tackled about it by Labour MP Stella Creasy.

Sir Mark has claimed the company has a completely different business model to payday lenders, who have attracted criticism for giving sky-high interest-rate loans.

Sir Mark makes the defence in a letter to Creasy (pictured) who is leading a campaign against payday lending, after she asked Sir Mark whether the Wellcome Trust considered the wider social implications of investing in Wonga.

In the letter to Creasy, seen by civilsociety.co.uk, Sir Mark said he shared her concerns over the payday loan industry, but felt it was "misleading" to compare Wonga with payday lenders who had a completely different business model.

“We have found the company to be extremely engaging and always willing to listen to feedback,” Sir Mark said.

Creasy is leading a campaign to introduce a cap on the credit charged by high-rate lenders. This week, she is meeting Treasury ministers to discuss ways of tackling the problems associated with high-cost lending.

Creasy said: “I will be pushing for legislation introducing a range of caps on the cost of credit when I meet the Treasury minister Mark Hoban this week, and looking at what else can be done to affect the way this industry currently causes problems for people across our country.

“There is strong cross-party support for action so I will continue to press for Parliament to have the opportunity to make this happen.  Britain's consumers deserve the same protection from these exploitative practices as other consumers across the world.”

 

 

Tom Dawson
Senior Partner
Alchemy Marketing
28 Jun 2011

Whilst Stella is on her crusade to clamp down on Payday Loan Companies, might it not be a good idea for her to take her eye of the sky high interest rates of short term loans and take a look at the 'stellar' interest rates charged by banks for unauthorised overdrafts, often in the millions percent APR region?

I would rather settle for a payday loan at £25 for £100 than be charged the best part of £85 to go £25 overdrawn at my bank!

It is the lack of avcailable credit bought about by the economic disaster managed so well by David Camerons predecessor that is driving people to have to borrow from payday lenders as ther simply is no alternative.

Matt Knopp
Director
Eastside
14 Jun 2011

I live in Brixton and was sad to see more payday loan places open on the high street last year as more people struggled to keep their heads above water. However, instead of spending a lot of time bringing in legislation why can't our politicians spend more time encouraging enterprising social lenders into the marketplace with more competitive, more ethical offers. Why haven't more Credit Unions and other forms of fairer finance been more successful while payday loans taking huge fees, ripping off their customers seem to grow year on year? There must be some sort of gap between what social enterprise finance lenders offer and what the customer wants? Why else would someone pay huge sums to get money advanced? Surely it can't just be consumer ignorance and ease of access. If it is then there is a lot the government could be doing to help people manage on low incomes and build the social lending sector apart from just throwing legislation at the market.

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