SUNDERLAND City Council is facing criticism after it emerged that its pension fund has invested in controversial payday lender Wonga.
The council is one of five local authorities paying into the Tyne and Wear Pension Fund, which in turn has ploughed £233,000 into the payday loan company.
Sunderland has pledged its support to affordable credit, including credit unions, and has blocked access to payday lenders from computers in civic buildings.
Tory opposition leader Robert Oliver said more needs to be done to control where council funds are invested.
“Political leaders in Tyne and Wear need to adopt a more robust attitude towards the portfolio managers of the pension fund to ensure it is not investing in companies which are contributing to social problems in their local authorities.
“Currently, and despite concern being raised on several occasions, the local government pension fund includes tobacco, alcohol and payday lenders, all three of which are detrimental to the livelihoods of people in Sunderland.”
Sunderland City Council leader Paul Watson said: “The city council has a strong track record of supporting accessible and affordable credit, for example, we have blocked access to payday lenders from our computers in council buildings.
“We have had a city-wide exercise to crack down on loan sharks, and are working closely with our local credit union, as we want the people of Sunderland to have affordable loans which meet their needs.
“We do not have any direct investment in payday loan companies, and we will continue work with the Tyne and Wear Pension Fund, who have advised their investments are being kept under constant review.”
Last week, The Chancellor of the Exchequer announced that the government will legislate to introduce a cap on the cost of payday loans.
The cap will be formally established through amendments to the Banking Reform Bill which is going through Parliament.
Meanwhile, payday lenders are already on notice following the announcement by the Financial Conduct Authority of tough new rules they will have to meet next year.