Wonga Loans ‘Damning Indictment’ Of Banking System

The shadow business secretary has claimed the decision by Wonga to introduce business loans at annual interest rates of 180% has emphasised the failures of the government and the financial sector.

Speaking to the Telegraph, Chuka Umunna said the move was “a damning indictment” of the banking system and the coalition’s failure to support firms.

“Look at the rates of interest Wonga is charging. This is not cheap money,” he said. “It is such a damning indictment of the failure of government to get the banking sector working that an outfit like Wonga feels it can step into this market and that there will be a plentiful supply of customers.”

The controversial money lending service will offer loans between £3,000 and £10,000 to cash strapped businesses, starting at 16.6% APR and rising to 180% for customers with poor credit rating.

The loans can be provided within 15 minutes of applying; however, Wonga says that it turns away approximately two thirds of applicants, and also claims that APR is not “relevant” to its deals as the loans are offered on a short-term basis.