Friday, 26 July 2013

Justin Welby takes on Payday Loans

Well, the Archbishop is taking on Wonga, wanting to challenge them not by legal means, but by competition. This is an interesting statement, and it made me think, because I am not sure whether it is a good or a bad idea.

Let me make it clear, the proposal to support credit unions is a good one, because credit unions are a good idea, and I completely support them. What is more, Wonga and other similar payday loan lenders are bad, charging exorbitant interest, and drive people more and more into debt.

So I have no problem with the church either standing out against the loan companies, or in support of credit unions. I am just not sure whether this is the right way to go about making a change.

The problem is the story I was told of one credit union in Essex, which was initially hosted in a church, but didn't take off until it moved out. The problem I have is that, by making this close association, the negative associations of the church might reduce take up.

There are problems with the perception of the church, and having "church" support to the credit unions, especially if they are involved financially and closely, then there is a danger of this reflecting negatively. Some people - and often those in the greatest need - struggle with the church, and may refuse to use credit unions if they have problems with the local church.

This is where I think my concerns lie. Many of those in need have problems with the church, either personal ones, or because there is a sense  that the church is not always the most moral of organisations. The problems of individual clergy reflect badly on the church as a whole; the problems of the church as an organisation reflect badly on the local church.

And there are some who might feel that this is the ex-banker wanting to turn the church into another bank, to sort the churches financial problems. Now I should point out that I don't think Justin Welbys motives are mistaken here - I don't think he is trying to do anything of the sort. I think he is trying to use his business and financial knowledge to address some of the critical problems of our country - getting money to those who need it. I think that is a good and worthy thing to be doing, and a great use of his skills.

However, I wonder if he fails to see the problems, because his perspective on the church is a warped positive one. I think he misses the fact that, for many people, the church is not the beacon of hope and light that he sees it as. For all his good intentions and ideas - and I firmly believe that he is right in so much of what he says here - I wonder if it is too late for the church to be involved in this.

Since I started to write this, more revelation have come to light that the CofE actually has money indirectly invested in Wonga. It is an oversight that he had not checked up previously, but he has promised to check up on it - let us hope that he is serious about this, and addresses the investments that the church has, not just in Wonga but wider. His reaction and response to this was excellent, but it indicates that the institution is already compromised. This is the reason that it should not be involved in something like the Credit Unions, not directly.

 The compromised nature of the institution is also reflected in the local churches - not in the same way, or to the same extent, but still compromised, to the point that involvement in these sorts of enterprises, on an official level, is a mistake. On a personal level - where churches or, better, individuals, support and enable the unions - that is where the involvement should be.

Maybe the real answer is to say very loudly and very clearly that Wonga is not an answer to your financial problems. A credit union might well be. Give them a try.


  1. The problem with pitching credit unions against pay-day loan companies. Is that they are not in the same market.

    To borrow money on a credit union you need to have saved some money with the credit union first. It isn't instant cash.

    People who want instant cash will still go to the Wongas and their like.

    Sad really because we are in a credit union, and they work.

    1. I didn't think that was a condition of CUs - my local one doesn't require that. It does fit in the same area, for people who need short-term unsecured loans.

      My local one is funded by locals, but is open and available to anyone. Yes, some people will still go to Wonga, but properly run CUs can compete.