The Church Of England Targets The Payday Loan Industry

welby17:55 Thursday 25th July 2013
BBC Radio Cambridgeshire

[C]HRIS MANN: Is it the job of the Church of England to compete with short term lending firms like this one. (TAPE)
ADVERT: With a cash loan from wonga dot com, you can choose how much you want and for how long. And money can be in your account in fifteen minutes. That’s how we roll. (CAR HORN FANFARE)(LIVE)
CHRIS MANN: Well that’s an advert for the online lender Wonga, who’ve been given a stark warning from the Archbishop of Canterbury today. The Most Reverend Justin Welby has told Wonga’s boss the Church of England plans to force it out of business, not through new laws, but by competing against it. And how might that happen? Well, through credit unions. They’re usually small community based organisations which charge their members low rates of interest to borrow money. Dr Malcolm Brown is the Director of Public Affairs at the Church of England. (TAPE)
MALCOLM BROWN: There is the credit union sector, the community finance sector. Its interest rates are capped. It can’t demand the kind of APR that Wonga and other firms do demand. But it can serve local people and local communities very well. It needs to expand. There are certain things blocking its expansion, and we’re trying to say, what has the Church of England got that we can throw into that mix. (LIVE)
CHRIS MANN: The Church of England has already set up its own credit union for clergy and church staff. But now it wants to offer its buildings and expertise to some of the hundreds of credit unions around the country. It’s in keeping with the Church’s teachings, where money lending is not a problem, but charging excessive interest is considered a sin. For many there is concern about payday lending firms who offer short term loans, often at high interest rates, which have been accused of leading people into more debt. The Chancellor George Osborn agrees there are problems with the industry. (TAPE)
GEORGE OSBORN: I do think payday lending has got to be better regulated, which is why I’ve created the Financial Conduct Authority, a powerful new consumer regulator. And look, I’m all for families having real choices about where they can borrow money, and that’s why I’m all for seeing more credit unions of the kind that the Archbishop is talking about. And actually we’re taking quite a few steps to bring that about. (LIVE)
CHRIS MANN: Wonga’s boss is Errol Damelin. He met with the Archbishop of Canterbury, and insists his firm is not a payday lender. He says he welcomes the move by the Church of England, because he’s all for better consumer choice. And there are certainly some customers who are satisfied with the service Wonga offers, like Ian CRaig, who’s a supply teacher. (TAPE)
IAN CRAIG: Well I’ve never had any trouble with them, because I’ve been completely sensible in terms of my borrowing. I’ve never had money from them when I’ve not had money coming in to pay them back. The interest rates, while some people would say are very high, if you consider say having short term a couple of hundred pound loan, and then paying it a very very short while later, and only paying twenty pounds additional, it doesn’t seem that bad. (LIVE)
CHRIS MANN: But critics say what really people want is the speed and convenience offered by payday lenders, not the short term nature of the loan. And certainly not the high interest rates which can sometimes be thousand of per cent. Frank McKillop from the Association of British Credit Unions says he wants more people to have access to an affordable loan. (TAPE)
FRANK MCKILLOP: The Government’s investing £38 million in credit unions over the next two years, which will allow us to automate more of our systems, to offer more instant lending decisions. So credit unions will be able to meet that consumer demand for instant credit, but to spread that loan over a longer period, so that the loan is more affordable than the conventional payday model.