Those of you across the pond may not have heard about the Church of England’s broadside against the seedy world of payday loans. More ‘reputable’ companies have sprung up offering ridiculously high interest and low security loans to desperate people in need. The whole business is spurious and morally dubious at best. So the knights in shining armour, the COE, have stepped in like Jesus throwing about the tables of the moneylenders. The analogy is not quite an analogy because I think this is actually what they are doing – the modern day equivalent. The NT rebooted.
The Guardian reports it:
The Most Rev Justin Welby said he had delivered the message to Errol Damelin, the chief executive of Britain’s best-known payday lender, during a “very good conversation”.
“I said to him quite bluntly ‘we’re not in the business of trying to legislate you out of existence, we’re trying to compete you out of existence’,” he told Total Politics magazine.
The payday lending industry has been one of the fastest growing sectors during the recession, as stretched consumers have turned to short-term loans to get them through to the next wage packet.
However, critics of the £2bn a year industry have accused lenders of targeting vulnerable borrowers with small loans which quickly spiral into big debts as a result of high interest rates and fees.
Lenders are currently the subject of a full-blown investigation by the Competition Commission after the Office of Fair Trading uncovered “deep-rooted” problems.
The regulator said it decided to make the referral because it continues to suspect that features of the market “prevent, restrict or distort competition”.
In June, Wonga raised the standard interest rate it quotes on its website to 5,853% APR, leading to renewed calls from poverty campaigners for a cap on the cost of short-term credit.
Someone borrowing £200 for a month from Wonga will typically pay back £270.
Welby, who has served on the parliamentary Banking Standards Commission, said he wanted to create “credit unions that are both engaged in their communities and are much more professional – and people have got to know about them.”
He acknowledged that this would be a “decade-long process”, but he has already launched a new credit union for clergy and church staff earlier this month at the General Synod in York.
There are also plans to encourage church members with relevant skills to volunteer at credit unions. Small, local lenders could also be invited to use church buildings and other community locations with the help of church members.
However, credit unions, which have an old-fashioned image and something of a chequered financial past, will have their work cut out if they to seriously challenge of Wonga. The lender spent £16m advertising in 2011, and has invested heavily in its website. Slick back office systems mean borrowers can get their money in less than 15 minutes.
In contrast, membership of credit unions is restricted to interest groups, and several gone bust in recent months with many citing bad debts as a factor.
Wonga said in March that it welcomed any attempt to encourage responsible lending and that it has been “instrumental” in helping to raise industry standards.
Damelin said: “The archbishop is clearly an exceptional individual and someone who understands the power of innovation.
“We discussed the future of banking and financial services, as well as our emerging digital society.
“There is mutual respect, some differing opinions and a meeting of minds on many big issues.
“On the competition point, we always welcome fresh approaches that give people a fuller set of alternatives to solve their financial challenges. I’m all for better consumer choice.”
The government announced an investment of £38m in credit unions in April to help them offer an alternative option to payday lenders.
But this great piece of satire really made me laugh. From NEWS Thump:
Wonga.com retaliates by unveiling ‘believable’ religion
Payday lender Wonga.com has stepped up its increasingly fractious trade war with the Church of England by announcing a religion.
As the Church said it was moving into the payday lending business, Wonga said a move into religion was the logical next step for their business.
Wonga Chief Executive Errol Damelin said, ”We’re both targeting vulnerable people who really should know better – so there’s a lot of synergy here.”
“The Wonga religion won’t make ridiculous claims about returns you’ll never see, like eternal afterlife. Where’s the fine print on that one, eh Justin?”
“We can offer men in strange outfits, happy clappy songs and uncomfortable seating – no problem.”
Claims that the Wonga religion would be full of logical holes, and be easily dismissed by anyone capable of original thought have been strenuously denied.
Damelin went on, “We haven’t got all of the details sorted out but we may be working with Wetherspoons, what with them having plenty of cheap bread and wine.”
“Clearly we don’t have a coherent moral and spiritual code but frankly neither does most of the clergy and at least we can offer gay marriage.”
Asked if he wanted to take on the Catholic Church he said, “The COE is one thing but when it comes to an ingrained history of child abuse, misplaced guilt, irrational superstition and celibacy we will leave it to the experts.”