The controversial payday lender Wonga has come under fire ahead of a new film that the company hopes will contradict claims that it exploits vulnerable consumers. Directed by the Bafta-nominated Gary Tarn, 12 Portraits will debut on Monday at a glitzy premier in Soho.
It is billed as a “modern, authentic and relevant portrait of British life” and will tell the “real stories” behind why people borrow money from Wonga. The launch comes less than 24 hours before bosses from some of Britain’s largest payday lending companies appear before MPs as calls grow for tighter regulation of the sector.
Payday lenders have been criticised for their huge interest rates and their advertisements, which in some cases appear to make light of the harmful effects of their products. Following its release, 12 Portraits is expected to be distributed via social media.
Business minister Jo Swinson was among those over the weekend to add her voice to the criticism of payday lenders. Ms Swinson is set to appear at the session on Tuesday, which will hear evidence from bosses of leading payday firms.
She said: “I’ve certainly been concerned about vulnerable customers being lured by adverts into taking out payday loans that aren’t right for them. While for some people in some circumstances payday loans can be a useful product, there are many others who are already in financial difficulty.”
She added: “These lenders have far bigger advertising budgets than debt charities or government money advice could ever hope to have.”
More than one million people plan to take out a payday loan to cover the cost of Christmas, according to the Government-backed Money Advice Service.
Serai Hann from Swansea took a £100 loan to buy Christmas presents and found herself hit with a £600 bill. “The film will depict 12 cases of people that have taken out loans and are able to pay them each week,” she said. “But for each of those there are thousands and thousands that are signing-themselves up for deeper and more destructive debt.”
Steve Doran, who got into trouble with debt after taking out a Wonga loan in March 2011, said: “Ultimately, these are often very desperate people making decisions under very tight circumstances.”
Even after paying off her debts, she says she is still hounded by advertising. “Even now I am getting hit with offers to win an Xbox or enter raffles.”
12 Portraits is being released as the Financial Conduct Authority finalises plans to be introduced next year that would force lenders to place “risk warnings” on advertising. The rules will allow payday lenders only to roll over a loan twice, while just two unsuccessful attempts to claw money back out of an account will be permitted.
Wonga says around 85 per cent of its loans are repaid on time and less than 10 per cent of loans are extended. Niall Wass, the company’s chief operating officer, said: “We have a few loud critics and while the scrutiny of mistakes we make is absolutely appropriate, the voice of people who actually use and value our services – the silent majority – are usually missing from the picture.”