Activists start war on legal loan sharks

Northern TUC, Citizens Advice Bureau, credit unions, advice agencies and housing associations have joined forces to challenge payday loan sharks charging annual interest rates of 4,000 per cent and more.

One of them, Wonga, has moved into the region by becoming a sponsor of Newcastle United Football Club.

Wonga's own website gives examples of short-term loans with annual interest rates of 4,214 per cent.

The Sharkstoppers group will be active on Sunday in Newcastle city centre warning the public about the legal loan sharks' activities in an industry now turning over £8.5 billion.

In the north-east they are cashing in on a region where incomes are on average 10 per cent lower than the rest of the country.

The campaigners will also be promoting alternatives to legal loan sharks, in particular credit unions - local, co-operatively run people's banks.

Northern TUC regional secretary Kevin Rowan said the North-East is being battered by the coalition's austerity measures. As a result the region has the lowest household incomes in Britain and the highest unemployment rate, he said.

"It is no coincidence that Wonga have come here to sponsor Newcastle United and not chosen a club like Chelsea.

"Legal loan sharks are cynically trying to prey on the most vulnerable people but trade unions and other groups are campaigning hard to expose them and promote credit unions as the affordable alternative.

Mr Rowan called for the sector to be regulated and for a "sensible cap" on the rates some payday loan lenders charge.

Financial Inclusion and Capability North East regional manager Alison Baxter added: "We want this to be the first of many events which will help raise awareness and influence change."