The payday loan firm that has united the North-east
Sponsorship is an emotive issue, as Wonga's new deal shows.
Wonga's £24m sponsorship of Newcastle United announced this week has started a spark of protest in the region. The complaints focus on the fact that the payday lender targets hard-up people with expensive loans they often can't afford.
Wonga is a relatively young business so is keen to raise its profile among people who may be tempted by the chance of borrowing money very easily. The north-east is a prime recruitment area, with Newcastle the 40th most deprived borough in the country.
But local debt experts fear that Wonga's arrival as Newcastle United's shirt sponsor could encourage more people into easy credit and, eventually, into a desperate debt cycle and even into the arms of unscrupulous and often violent loan sharks.
Shona Alexander is manager of the Newcastle Citizens Advice Bureau (CAB). "Our workload has increased remarkably in the past 12 months and more and more people get into trouble by taking out payday loans," she says.
"The lenders seem to target young people which is why it's worrying that the Wonga deal includes funding for the football club's academy. They're exactly the kind of people that payday lenders want to get their grips into."
Alison Baxter is development manager at Financial Inclusion and Capability North East, a new company recently set up to tackle financial exclusion and improve financial confidence in the area.
"High cost credit, and, in particular, payday loans, are a great cause for concern in the north-east," she says. "Some parts of the region suffer from high levels of deprivation, more people are economically inactive than in the rest of the UK, and we have fewer job vacancies. Coupled with the lowest household incomes in England, this creates the perfect market for high-cost lenders as more people struggle to cope financially."
Wonga already sponsors Blackpool FC, which is located in another area notable for being full of struggling, hard-up folk. The company claims it doesn't target vulnerable people, but there's plenty of evidence of Wonga's irresponsible advertising or the company trying to flog its expensive loans to people who are unlikely to be able to afford them.
Earlier this year we reported it caused outrage by suggesting in an article on its website that students should take out loans that cost up to 4,214 per cent rather than using Government-backed student loans, which charge around 5 per cent.
Before being removed, the article outrageously suggested that "student loans potentially encourage you to live beyond your means".
In the summer, the Office of Fair Trading criticised Wonga for accusing some of its own customers of being fraudsters. Aggressive letters and emails were sent to struggling people who had started debt-management plans to try to stop their debts spiralling out of control.
Even this week Wonga was in the news after its ads were found on a smartphone app aimed at children. The Talking Ginger app teaches children how to get ready for bed but included Wonga ads offering "cash loans of up to £400".
The Office of Fair Trading is now investigating the whole sector amid accusations that payday lenders target the vulnerable and encourage them into a spiral of debt by rolling over loans, month after month, until the total owed is much more than the amount originally borrowed.
Wonga has made huge profits on the back of its offer of easy money. It made pre-tax profits of £59.2m in 2011 – more than four times the 2010 figure of £14.1m, showing how it's cashed in on people struggling to survive during the recession.
In Newcastle, council leader Nick Forbes was disgusted with the club's tie-up with Wonga. On Monday he wrote to Newcastle United owner Mike Ashley to raise his concerns.
"The city council is leading a campaign against legal loan sharking as we believe it is morally unjustified and will cause financial hardship and misery for thousands," he wrote. "I believe the sponsorship deal is the wrong image for Newcastle, NUFC and football as a sport."
Back at Newcastle CAB, Ms Alexander is worried that the more people are encouraged into taking out a Wonga loan, the more will step down a path into the arms of local loan sharks.
"In our experience, it is often the case that someone who gets into trouble with payday lenders then turns to local loan sharks, who often work in groups on the estates," she says. "While Wonga and other payday lenders are aggressive in chasing debts, at least they only send threatening texts or emails.
"The loan sharks terrorise their clients, so much so that people are often too scared to tell us how much trouble they've got into."
A couple of Newcastle illegal loan sharks have been successfully prosecuted, but the battle to stop them continues. The arrival of Wonga as the local club's sponsor, won't help the campaign to keep people out of the clutches of the unscrupulous.
"For the north-east the use of short-term, high-cost credit is on the increase," says Ms Baxter. "Raising its profile through the use of football sponsorship just means that more people will use it. In turn, that means the cycle of low-income leading to high-cost credit leading to even lower disposable income will continue.
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Energy switching app Voltz allows users to switch with just a few taps
Money Insider: Smart alternatives to the pensioner bond
Number of serially under-performing investment funds has increased by a fifth, survey reveals
Bank-beating exchange rates on your international payments
- 1 Benedict Cumberbatch says Hollywood is better for black British actors
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 3 UK weather: Snow to fall in the coming week with sub-zero temperatures to last until early February
- 4 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 5 Warriors in ancient Iraq suffered Post-Traumatic Stress Disorder more than 3,000 years ago, say researchers
Nigel Farage: NHS might have to be replaced by private health insurance
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
George Galloway condemns 'racist, Islamophobic, hypocritical rag' Charlie Hebdo at freedom of speech rally
British Muslim school children suffering a backlash of abuse following Paris attacks
Islamic history is full of free thinkers - but recent attempts to suppress critical thought are verging on the absurd
iJobs Money & Business
£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...
£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village