This article is from the source 'independent' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.independent.co.uk/news/business/comment/wonga-scandal-politicians-and-regulators-are-ignoring-the-causes-of-this-social-cancer-9770574.html

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Wonga scandal: Politicians and regulators are ignoring the causes of this social cancer Wonga scandal: Politicians and regulators are ignoring the causes of this social cancer
(35 minutes later)
Slowly but surely the social cancer that is wonga.com is receiving a much needed blast of chemotherapy.Slowly but surely the social cancer that is wonga.com is receiving a much needed blast of chemotherapy.
Regulators are turning the screw with new rules that will cap its usurious interest rates and ensure that the company only lends to those who can afford to repay.Regulators are turning the screw with new rules that will cap its usurious interest rates and ensure that the company only lends to those who can afford to repay.
At the same time the sins of the past are being addressed. It was announced today that some 330,000 borrowers will have their Wonga debts written off at a cost of £220m. Another 45,000 customers will get some relief from its crippling interest charges.At the same time the sins of the past are being addressed. It was announced today that some 330,000 borrowers will have their Wonga debts written off at a cost of £220m. Another 45,000 customers will get some relief from its crippling interest charges.
That’s a lot of pain and worry eased.That’s a lot of pain and worry eased.
Moreover it’ll surely be fun to watch various current and former wonga-ites getting hauled before MPs and biffed when asked about all those claims the company used to make about being a responsible lender.Moreover it’ll surely be fun to watch various current and former wonga-ites getting hauled before MPs and biffed when asked about all those claims the company used to make about being a responsible lender.
The problem is that while politicians and regulators are belatedly getting tough on the lightening rod that is Wonga, they’re ignoring the causes of Wonga.The problem is that while politicians and regulators are belatedly getting tough on the lightening rod that is Wonga, they’re ignoring the causes of Wonga.
The lender’s spectacular early success was driven by an aggressive marketing pitch aimed at younger, web-savvy borrowers with a chronic lack of financial education. It did this at a time of significant social strain when more traditional sources of credit were drying up.The lender’s spectacular early success was driven by an aggressive marketing pitch aimed at younger, web-savvy borrowers with a chronic lack of financial education. It did this at a time of significant social strain when more traditional sources of credit were drying up.
Many of those customers will now find their way to alternative suppliers that themselves raise questions. Just look at the runaway growth of BrightHouse and its fellows that offer high cost consumer goods though the “rent to own” market. Growth that was getting the City salivating about BrightHouse’s stock market flotation prospects until the All-Parliamentary Group on Debt and Personal Finance started sniffing around.Many of those customers will now find their way to alternative suppliers that themselves raise questions. Just look at the runaway growth of BrightHouse and its fellows that offer high cost consumer goods though the “rent to own” market. Growth that was getting the City salivating about BrightHouse’s stock market flotation prospects until the All-Parliamentary Group on Debt and Personal Finance started sniffing around.
How long do we have to wait before a body with a little more clout takes up the cudgels?How long do we have to wait before a body with a little more clout takes up the cudgels?
Then there is the way that Wonga’s questionable practices have spread beyond the specialised lending sector. Variants of those fake legal letters chasing debts that ultimately cost Wonga close to £20m have been deployed by everyone from banks to energy companies.Then there is the way that Wonga’s questionable practices have spread beyond the specialised lending sector. Variants of those fake legal letters chasing debts that ultimately cost Wonga close to £20m have been deployed by everyone from banks to energy companies.
The cancer has metastized. And this may continue as Wonga’s downsized work force looks for new opportunities in corporate Britain. The cancer has metastized. And could this continue as Wonga’s downsized work force looks for new opportunities in corporate Britain?
My colleague Jim Armitage has already revealed that one John Hegarty, who was, from 2008 to September 2011 “Head of Collections and Fraud” at Wonga is now exercising his bill chasing skills at Scottish & Southern Energy where he serves as credit risk manager. My colleague Jim Armitage has already revealed that one John Hegarty, who was, from 2008 to September 2011 Head of Collections and Fraud at Wonga is now exercising his bill chasing skills at Scottish & Southern Energy where he serves as credit risk manager.
SSE appears not to have employed Wonga-style fake letters, by contrast to some of its rivals, so maybe Mr Hegarty has learned something from his Wonga experience.SSE appears not to have employed Wonga-style fake letters, by contrast to some of its rivals, so maybe Mr Hegarty has learned something from his Wonga experience.
Have his former colleagues?Have his former colleagues?
But it gets still worse.But it gets still worse.
Increasing numbers of people are falling through growing holes in the social support net. The sick, the unemployed, the disabled, the young. There are people in all of these groups that have fallen prey to the blandishments of Wonga and its ilk.Increasing numbers of people are falling through growing holes in the social support net. The sick, the unemployed, the disabled, the young. There are people in all of these groups that have fallen prey to the blandishments of Wonga and its ilk.
Too many found themselves calling upon them in responce to crises. They were classed by computer programmes as acceptable risks, they received their loans and then they crossed their fingers, and hoped something would emerge to get them out of jail. Too many found themselves calling upon them in response to crises. They were classed by computer programmes as acceptable risks, they received their loans and then they crossed their fingers, and hoped something would emerge to get them out of jail.
Something did come along for the 330,000 Wonga customers who are now getting their debts forgiven under the auspices of the Finanancial Conduct Authority.Something did come along for the 330,000 Wonga customers who are now getting their debts forgiven under the auspices of the Finanancial Conduct Authority.
But what happens the next time they get into a jam? And what about the millions of others already in that position.But what happens the next time they get into a jam? And what about the millions of others already in that position.
Cheering Wonga’s capitulation might be fun. But shouldn’t that concern us more?Cheering Wonga’s capitulation might be fun. But shouldn’t that concern us more?