News has emerged that the payday loan firm Wonga is going into administration.
A staggering feat for a business whose model operates on charging exorbitant amounts of interest for short-term loans.
I for one will not be mourning the end of this vulture-like business interest. That being said, my sympathies are with those who are going to lose their jobs as a result of this collapse. Not only that, but I feel for those who have outstanding debts with Wonga, as they are also in an uncertain situation. There should be clarification about which, if and how people’s debts will be sold onto another company or collection agency as soon as possible.
Aside from this, I will be glad to see the back of Wonga as payday loan companies simply take part in legalised loan sharking. They prey and leech off the vulnerable, those living hand to mouth and often in precarious, insecure work.
Since the news broke and even prior, I have spoken to constituents who have taken out payday loans. Many of them were in desperate financial positions and strongly regret using them. The concept that companies like Wonga are ‘helping people in need’ is nothing short of Orwellian, as in reality, the opposite is true.
One would hope that this would signify the beginning of the end for the entire sordid industry. However, this is unlikely.
The debt charity StepChange rightly notes that despite the collapse, the economic pressures that people are facing have not changed. As long as we continue to tolerate zero-hours contracts and a faux ‘National Living Wage’ that people struggle to survive on, then companies like this will continue to take advantage of the insecure position many find themselves in.
As such, we must use the demise of this callous company as an opportunity - a means to reflect on what we can do to help the tens of thousands of people in the country who are regularly reliant on these services. Surely, there is a fairer way. For example, imagine if the minimum wage increased, fewer people would feel the financial pressures that lead them to companies like Wonga. Banning zero-hours contracts could improve the job security of people up and down the country, and this would also foster an environment in which people are not easy prey for prowling payday loan sharks.
As one of the richest countries in the world, it should not be the case that over one million Britons are in such dire straits they have to turn to high-cost credit to make ends meet.
While the demise of Wonga means there is one less exploiter out there, unless the government decides to transform our debt-riddled economy by investing to save – other payday predators will continue to thrive.