Bankers on Wonga: payday lenders causing ‘misery and hardship’ even among the rich

“At lunch when people said, ‘Where shall we go to eat?’ I’d go on my own and steal lunch,” he says, admitting that it “sounds mad”.

Despite earning many more  thousands each year than his age, he often couldn’t afford to buy food during the working day or pay for a train ticket home — his salary being largely eaten up in the Square Mile’s bookies as a result of his gambling problem.

He never told his family or his friends, but every week he was visiting a payday lender and writing three £100 cheques out in exchange for £240 in cash. If the cheques bounced at the end of the month, the silent misery of this high earner in the heart of the financial district would move up a notch — as it often did.

Monday’s headlines about 78 HSBC bankers being paid more than £1 million last year tell one side of the City’s story, but there is another.

The Standard has heard stories of highly paid banking professionals like Jamie left close to ruin after using payday loans to support their City lifestyles and excesses. All young, from middle-class backgrounds and earning between £50,000 and £200,000 a year, they have experienced the familiar problems of taking out expensive loans to pay off others, and the stress and secretiveness of living life with unmanageable debt.

This morning a damning report from the Office of Fair Trading gave the 50 biggest payday lenders just 12 weeks to change their business practices or risk losing their licences, criticising the industry for “widespread irresponsible lending”, and focusing criticism on the practice of rolling over debts when a borrower can’t pay back the original amount. OFT  chief executive Clive Maxwell said the firms were “causing misery and hardship for many borrowers”.

Payday lending is considered a plague on the poor and desperate by those who campaign against its practices but it is clear that its tentacles spread wider.

Leading Harley Street addiction therapist Mark Dempster says he has been surprised by how many of his City clients have used payday lenders after the Square Mile’s lifestyle excesses turned into addictions.

“These are highly paid people having to get help from their parents to pay off loans of thousands,” he says. “All the money that they generate through their income is going straight out on high interest repayments — the stress and even depression it causes is huge.”

Jamie got out of his problems when he started a higher-paying job, although he says some of the money he owes from that time is still outstanding.

Duncan, 40, had problems with debt that not even a big salary could solve. Earning £120,000 a year, before bonus, he is a trader at a big bank in the City. A few years ago he was living with his partner in an expensive apartment near Lambeth Bridge, but familiar lifestyle troubles hovered.

“I had quite a heavy gambling problem, from which I’m recovering,” he says. “When you’re gambling and sniffing cocaine, you can do £2,000 in a night. It was heavy duty.”

“The loans started with £500 and then it got worse. The amount you’ve got to pay back on those kinds of loans is astronomical.

“If I was waiting for my payday and I borrowed £2,000, I’d pay back £2,700 or something. I was borrowing for everyday living. In the loan shops, they don’t care what you look like — cash is king to them, so they treat you the same as a homeless man with a dog.”

Duncan estimates that over a few years he borrowed more than £120,000 from payday lenders. And quite quickly they were on his doorstep.

“I had loan sharks turning up in the evenings, so I put the flat in my partner’s name and started chopping and changing names and things. I started using a family member’s name and identification — he was in Australia. You have to turn into a totally different person — it’s fraud.”

“I’ve never been very good with money, but when I started earning a lot, it started escalating,” says Rebecca, a 35-year-old headhunter who earns £80,000. “I started using payday lenders a lot. The interest rates were crazy — 58 per cent or something ridiculous. You think it’s just a quick fix, but it gets out of control and then you’re getting one loan off to pay another debt off. At the worst point I had about £14,000 debt to them.”

She says that many City high-earners never earn enough to insulate them from the huge costs of trying to keep up with the Square Mile’s expectations of entertainment, drugs, partying and — for women especially — appearance.  “You are judged in the City on the way you look and how you present yourself,” she says. Among the “prestige” purchases she made were £1,000 handbags.

“People look at you and assume ‘this person must be really together’,” she says, “but I’ve still got a few thousand pounds’ debt that I’m paying off.” Money from a family member bailed her out of most of it, a difficult admission for a successful thirtysomething professional to make.

Retail banker Matt, 35, says living and working with high-interest debt — borrowed from, among others, Wonga, Payday Express and Toothfairy Finance — “was one of the most stressful, hardest things that I’ve ever had in my life.” Throwing away much of his £50,000 salary on machine-gambling, he trembled with fear at the thought of being fired for his payday borrowing.

“They don’t do a credit check on you, but some will call your employer just as a dummy call to make sure you work there,” he says. “They just say ‘Can I speak to Matt Fleming?’ and they will hang up if they are put through.

“Prior to my problems, I lived in Wimbledon and I had a good relationship with my partner,” says Matt. “When the debts piled up my partner was on the verge of leaving me and going back to Canada. I was lying. Because I was borrowing money so expensively, I never had any money to do anything with her, either.”

He still gets texts and emails from some lenders, even when he has specifically requested that some of them blacklist him. “Once they’ve got their teeth into you, it’s very easy to get stuck in the cycle,” he says.

He says he resents that Wonga, the hugely successful web-based lender that has become a byword for the growth of payday debt, “market themselves more as a respectable finance company rather than one of these pawn shop lending-type companies”.

“If you pay these lenders back quickly, they’re not necessarily too bad, given overdraft fees and bank charges. But if you sustain them over a long period of time, it’s unmanageable. I got to a point where I basically reached insolvency and I couldn’t pay them off any more.”

None of the City workers who spoke to the Standard expected to encounter pity about their troubles with payday loans. But all, including Mark Dempster on Harley Street, have been visited by a troubling thought: “If highly paid workers in the Square Mile can suffer like this at the hands of payday lenders,” says Dempster, “imagine how bad it could be for those at the other end of the income scale?”

*Some names have been changed.