• ‘North east has highest insolvency rate in country’
• Wonga offer short-term loans at 360%
Newcastle United’s decision to sign a four-year sponsorship deal with the payday loans company Wonga has been attacked by a trade body for insolvency professionals.
R3 claims that the fact that the north east has the highest rate of insolvency in the country makes Wonga – which offers short-term loans at an annual percentage rate of 360% – an innapropriate choice of sponsor.
Wonga’s logo will appear on Newcastle shirts for next season and has agreed to invest £1.5m into supporting the club’s academy and the Newcastle United Foundation Enterprise Scheme, which helps 15- to 16-year-olds find work.
But R3’s president, Lee Manning, believes the £24m deal has the capacity to do more harm than good.
“According to official figures, the north east has the highest personal insolvency rate of anywhere in the country, at 35.2 per 10,000 adults. This is compared to a rate of 29.6 in the North West and 17.5 in London.
“Wonga has chosen to target a region that has comparatively high numbers of people experiencing financial difficulty. Our experience tells us that many of those seeking high cost credit need professional advice for their financial problems, rather than accruing further debt.
“R3 research has found that 4mpeople say they are likely to take a payday loan in the near future. This comes at a time when 71% of individuals in the North East think there should be stricter regulation of advertising of payday loans.
“We also found that over a quarter (26%) of people in the North East say they often struggle to make it to payday, compared to around a fifth (21%) nationally. There are a whole range of solutions available to people who are having difficulty with their personal finances so we would urge those individuals to seek advice from a regulated professional, or a charity, and not compound their problems by taking on more credit.”
Derek Llambias, the managing director of Newcastle United, said: “We are building a club that can regularly compete for top honours at the highest level. Throughout our discussions Wonga’s desire to help us invest in our young playing talent, the local community and new fan initiatives really impressed us and stood them apart from other candidates.”
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