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An influential group of MPs has sought assurances that Asda is not “squeezing staff” to drive profit after it emerged they are being offered high-interest loans by Wagestream, a company in which the retailer’s owner has a stake.
The business and trade select committee has written to Asda over its links to the “financial wellbeing app” that recently began offering the supermarket’s staff loans of up to £25,000. The default arrangements for Wagestream’s “workplace loans” involve debt repayments being directly deducted from workers’ pay packets.
A holding company controlled by Asda’s private equity owner TDR Capital is a shareholder in Wagestream, which has been offering Asda workers a range of other services, including savings pots and wage advances, since 2023.
Documents filed at Companies House show that the holding company – Bellis Financial Investments 2 –is one of a number of shareholders in Wagestream, alongside former Wonga payday loan investor Balderton Capital, and social impact investors including the Joseph Rowntree Foundation via the Fair by Design Fund.
However, the Guardian understands that the retailer did not flag its financial link to Wagestream to staff when it initially launched the service to workers two years ago. Wagestream started offering “workplace loans” to Asda staff earlier this year.
Liam Byrne, the chair of the business and trade committee, said he had written to Asda “to ask them to reassure us that frontline workers aren’t left facing sky-high interest rates, and that its workplace lending is compliant with Asda’s legal requirements under employment law”.
“Asda is one of Britain’s most important employers with over 150,000 workers and is at the heart of our grocery market,” he said.
“Our concern today is that instead of easing Asda’s debts, its parent company may be piling pressure on Asda’s people – squeezing staff to service liabilities and drive profit to its financial investments. If this is the case, it raises serious questions as to Asda’s responsible stewardship, and the long-term financial sustainability of the business as a whole.”
Asda’s finance director, Michael Gleeson, told the committee in 2023 that a £100m investment in Wagestream and two other financial services businesses, had been funded out of proceeds from the £1.7bn sale of Asda’s warehouses which the company now has to pay rent on under a leaseback deal. “We are part owners of each of those three companies,” he told MPs. Bellis is understood to hold a 4% stake in Wagestream.
Asda said it does not pay Wagestream for any services or receive any financial benefit if a member of staff chooses to use the app. However, as a shareholder, Asda’s parent group has a direct interest in itssuccess and would have the right to share of any future dividend payments or from the sale of the group.
Wagestream is yet to pay a dividend and remains loss-making, having last reported a £22.2m pre-tax loss in 2024.
That could change before long, however, with revenues having grown by more than two-thirds, 64%, to £36.9m last year, when it handed out 20.6m wage advances worth a total of £1.5bn.
The rollout of workplace loans could propel earnings, which have so far relied on fees linked to its wage advance product. Wagestream said a rise in revenues in the upcoming year would probably outpace costs and start “moving the business towards profitability in future periods”.
A spokesperson for Asda, which is the UK’s third largest supermarket, said: “Asda offers colleagues access to a range of established financial products through a partner regulated by the Financial Conduct Authority (FCA). These include salary advances, workplace loans and savings products paying a competitive interest rate of 4.33%, which is currently used by more than 18,000 colleagues.
“Many other large employers, including all of Asda’s direct competitors in the grocery sector, offer similar products to their employees through the same, or competitor providers.”
Asda added that all applications for Wagestream’s workplace loans were subject to “robust affordability checks” before being approved. “At present fewer than 2% of Asda colleagues have taken out a loan. The representative APR on these loans is 13.9%.”
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Wagestream began rolling out the loans to clients like Asda at the end of 2024. Those loans come with a representative APR of between 13.9% and 19.9%, meaning at least 51% of borrowers will get that rate.
But the ultimate cap is negotiated with each employer, topping out at 34.9% APR. Wagestream insists that its model still saves borrowers an average of £593 a loan, with customers having been charged an average APR of 62% by former lenders before turning to the app.
Nadine Houghton, a national officer at the GMB union, which represents Asda workers, said it was concerned about the financial links between Asda and Wagestream: “It leaves a sour taste in the mouth that TDR has a financial interest in the app that facilitates Asda workers taking these financial risks while also being the overall decision maker for how much these workers are paid and the hours they are able to work.”
“We now find out that Wagestream is offering dangerous loans at high interest rates and GMB members working in Asda tell us they have used the app to take advances on their pay which can contribute to a cycle of debt.
“The bottom line is that employers should pay workers enough to live on, to have savings and to not need to rely on dangerous high-interest loans or advances on their pay just to cover day to day living costs.”
Wagestream said in a statement that “as a regulated financial services provider, Wagestream has a conflicts of interest policy and has implemented processes to review and monitor conflicts of interest to comply with FCA rules.”
“TDR Capital’s holding in Wagestream does not create a conflict as it falls well below the thresholds set out by the FCA. As a minority shareholder, TDR Capital does not have operational or day-to-day control of any of Wagestream’s undertakings,” the statement added.
Wagestream said it considers potential conflicts when deciding on whether to partner with employers, which in turn sign its terms and conditions that require good consumer outcomes and transparency, including around fees.
TDR declined to comment.
