Wonga Skip
Ethics & Morality

As Wonga falls, Welby's church credit unions arise

 

Wonga may still be hanging on as the big boy of the much-despised payday loans industry, but how much longer before it comes crashing down in a blaze of self-inflicted destruction?

Where do we begin? Yesterday it was chastised (not for the first time) by His Grace’s old adversary the Advertising Standards Authority (ASA), who banned a Wonga TV advert for forgetting to mention that the APR on the loan featured was 5,853%.

Last week, with a large amount of arm twisting from the Government’s new Financial Conduct Authority (FCA), it decided to write off £220m of debts for 330,000 customers after putting in place new affordability checks. A further 45,000 customers in arrears will not have to pay interest on loans, and there is bound to be plenty more ex-customers who will be keen to make claims of unfair treatment in the hope of seeing sizable amounts of compensation, too.

Letters from fake solicitors threatening legal action were sent out to 45,000 customers between 2008 and 2010. In June, the FCA (who must be rapidly losing patience) demanded they pay back £2.6m million. The Chief Executive of the Law Society, Desmond Hudson, said Wonga’s “dishonest activity” could amount to blackmail and deception.

Their disastrous run of ignominy appears to have even rubbed off on Newcastle United. The club whose kit bears Wonga’s name is languishing at the bottom of the Premier League with numerous calls for their manger to be sacked.

Wonga was founded in 2007 and within a week of the launch the first loan default occurred. They haven’t looked back since. Their callous disregard for their customers, most of whom are far from being in positions of financial stability, has deservedly attracted vehement criticism from a whole host of sources.

Stella Creasy, Labour’s MP for Walthamstow, who also happens to be a Christian, has been working tirelessly with some success to make sure that the abusive practices of payday lenders and loan sharks have not gone unnoticed by politicians. She has received abuse along the way for this stand, including Twitter trolling from a (surprise, surprise) Wonga employee.

At ‘God and Politics’ I’ve been banging the drum for over two years highlighting all sorts of detrimental effects that Wonga and other payday lenders have had. The debt advice charity, Christians Against Poverty, carried out research last year and found that 78% of those taking out a payday loan were doing so in order to buy food. These are people who least can afford to be exploited by the predatory tactics of payday loans companies, and yet borrowing £200 for a month to pay for these essentials will incur interest charges of £67.15 from Wonga.

This is not just an issue of morality; it is also one of theology. In another post, I’ve explored this referring to the Children’s Society’s recent report entitled: Who Bears the Burden? Christian theology and the impact of debt on children. Without mincing his words, the author Luke Bretherton writes:

(A)t the heart of the story of salvation we find the power of money and liberation from debt. The admonition that we cannot serve both God and Mammon (Matthew Common6.19-24) is not a trivial matter; the central drama of salvation history is an act of liberation from debt slavery. To put the pursuit of money before the welfare of people, and use money to re-enslave and exploit people, especially the poor and vulnerable, is to turn your back on God’s salvation and deny in practice the revelation given in Scripture of who God is. Whereas to use money to serve the common good, and in particular to relieve the poor, is a mark of salvation.

And let us not forget the biggest protagonist in all of this – the Archbishop of Canterbury Justin Welby, whose threat to compete Wonga out of business during a conversation with its then chief executive, captured the media’s imagination.

Although no one can say for certain what effect Justin Welby’s comments had on the company’s credibility and appeal, five months after he spoke these words Wonga’s profits had fallen by 53% to £39.7m. There can be no doubt that the two are linked.

The predictions over the last few days that Wonga’s business model is now unsustainable present a dilemma. Much as many would like to say ‘good riddance’ to Wonga, such a demise will not help those who are in need of these small short-term loans. They will either turn to other lenders who are no better than Wonga, or, even worse, local loan sharks for whom extortion and threats of violence are a way of life. Wonga may be bad, but the last thing anyone needs is for increasing numbers of people to fall into the hands of these parasitic vipers because they have nowhere else to go.

Justin Welby’s dream, which is beginning to come alive, is of a network of credit unions run by churches around the country. The venture, which has been named the Church Credit Champions Network (CCCN), is only four months old, although the recruitment of former FSA chief executive, Sir Hector Sants as Chairman of the Archbishop’s Task Group on Responsible Credit and Savings, has been a major coup.

Initially the CCCN is piloting projects in the dioceses of London, Southwark and Liverpool. Holy Trinity Brompton (HTB), home of the Alpha Course, has become a frontrunner working with the London Plus Credit Union. It has also launched a new Charity Bond Account where HTB church members can join London Plus and put their savings into this bond.

Given its financial resources, reputation and networks through Alpha, this is a welcome development. HTB has the opportunity to become a major player and driver as the CCCN is rolled out to more churches.

David Barclay, Senior Network Co-ordinator of the CCCN has says:

We’re at the start of a long term process, and it is about trying to embed this in the life of local churches. That does not happen straight away – but we are really excited by the progress that has been made. There is no big bang change that will suddenly alter the landscape of financial services in the UK. The way that we overcome that is by building deep and real relationships between the churches and the credit unions, by investing the time and the energy that it takes to get to know each other as institutions and to think about how they can work really productively together.

One of the messages that credit unions are really keen to get across is that they’re not just a bank for poor people, but they’re for everyone – one that we work with has a ‘homeowners loan’ product where they beat the rate of any high street bank, for example. The hope is that credit unions will come to be seen by more middle class people as a kind of ‘fair trade finance’ where people are happy to both save and borrow because they like the ethics and they know their money will be partly used to serve people excluded by mainstream finance.

Sometimes you have to be careful what you wish for. The chastisement of Wonga is welcome, but it looks as though Justin Welby’s hopes are being fulfilled rather too quickly. In the short term, a Wonga that is beginning to clean up its act is actually a good thing, but in the long term our society needs something that offers a better deal to those for whom money is tight.

As it stands, only the churches in their desire to serve the people around them are offering a genuine and workable solution that can potentially function on a large scale. It is early days for the CCCN, but the pace needs to be increased. It is time for God’s people to take on this challenge and begin to deliver results. There are hundreds of thousands of people around our country who need what Justin Welby has instigated – not in several years time, but right now.

They can’t afford to wait.

  • Okey dokey. Let’s just take a step back here. Wonga is not creating a new problem, it’s providing a solution which is apparently better than other options available to the people taking out these loans.
    The economics of risky loans says that you charge a high interest rate to cover your risk of default (default means that the lender doesn’t get their money back).

    So if Wonga is not creaming it, and are making only a reasonable profit, they are probably doing about as good a job as you can, right?

    So what is the church going to do if it lends to someone who defaults?

    • CliveM

      You also have the problem that fixed costs ie the cost of setting up and administering the loan, need to be recovered over a shorter period. This also leads to higher interest rates.

      • peter_dtm

        Indeed

        I looked at getting a short term loan back end of the 70s.

        It went like this (figures NOT exact – but ball park from horrified memory) :

        Bank – Not interested
        Pawn Shop – £400 against a ring that’ll cost you £1200 to redeem in 2 weeks time (yup; legal Pawn shop doing an illegal deal…)
        Short term lender £200 over a month – interest of £20; setting up fee £100; Stamp duty – a few quid; Legal fees £50; Admin Fees £40 Government fee £20

        So what happens nowdays — ALL those fees are bundled into the amount you owe; and THAT is the figure on which the interst rate is worked out (borrowed £200 needs to pay back £430 plus stamp duty)- note how many of those fees are fixed and/or reflect the cost of doing business and that the ACTUAL interest rate was actually very reasonable.

        So are we comparing the right thing here with Payday lenders ? They lend to bad risk borrowers so incur high costs of doing business.; why can’t that be left as Admin Charges ? Yes it is still part of the loan; but I suspect we would have a less heated and more realistic discusion.

        Surely the discusion needs to be :
        How do we (as a society) manage short term cash flow issues – especially for those with little or no business/arithmatical capability ?

        Not : OHHHH look at that appaling interest rate (which is a false picture to suit the political take) That has got to be stopped it is so wrong !

        How do we deal with people who insist on making very bad descions ? How do we allow those who understand the issues and CAN deal with it (I understand at least some Wonga/Payday loans are succesfully paid off…) access a suitable business; whilst protecting those who can’t (or are too idle/or who have a pervcieved right) handle the transaction ?

        Education would help – a bit of basic arithmatic being taught at school would go a long way (Income £200 outgoings £201 – misery; income £200 outgoings £199 – hope for improvement to misquote someone).

        Going after Wonga/payday loan companies is going after the SYMPTOMS not the cause. The church should be involved in (finding/) curing the cause; not just treating the symptoms

    • Politically__Incorrect

      The reason that many people turn to PayDay loans is that the lenders don’t ask too many questions about their ability to repay. Many of the borrowers are students, who may or may not tell porkies about their real income in order to get the loan. I know for a fact (having worked alongside the industry for a short time) that PayDay lenders are happy to lend to students because they know mum and dad will always pick up the bill rather than see their son or daughter become destitute.

      Companies like wonga are creating a new problem, as witnessed by the sharp rise in debt amongst younger people because of payday loans. The exorbitant interest rates are “necessary” because the loans are relatively small and the company makes much of its profit from penalising defaulters in the manner of true loan sharks.

    • Marie1797

      The Credit Union charges about 26% to 27% apr.

      • right, and so people using wonga are either stupid or they have been rejected by the Credit Union.

        • CliveM

          Or CU’s are not yet widely enough available and advertised.

        • Marie1797

          Well maybe, but more likely to be very desperate.

  • Steve Stubbs

    In this whole saga, nobody seems to be focusing on those who took out loans, and then spent someone else’s cash, with no idea how or perhaps with intention to pay it back. Does Thou Shalt Not Steal come into this somewhere?

    • dannybhoy

      it’s a valid point.

  • GraceGuerilla

    I wish that the tide would also turn against shops like Bright Source – who offer luxury items for weekly payments, at exorbitant interest rates. Some years ago I walked past a store which had a big advert saying they ‘even accepted housing benefit cheques’. Horrible, horrible industry which lures the poorest of our society into a debt trap.

  • carl jacobs

    A couple of things:

    1. Credit is a privilege and not a right. You are not entitled to it just because you need it.

    2. It’s axiomatic among lenders that you never lend money needed to cover living expenses. If they don’t have enough money to pay for food, then how will they be able to repay the loan?

    What this means is that these borrowers typically shouldn’t be extended credit. The church will not magically make them credit-worthy by lending them money. So the church through its credit unions will face all the risks and costs of a high risk lender. In order to stay in business, it will have to adopt the price structure of a high cost lender. Perhaps those rates won’t be as high as Wonga. But they will still be high. They will also have to be willing to foreclose. Will a church be able to do such things given the obvious visuals?

    There is a real risk of this idea becoming a de facto charity. And people being what they are, the CU will soon have crowds standing at the door for what amounts to free money. “They give us loans, but they don’t have the courage to make us pay them back.” That is not a good business model for long term success .

    The general impression is one of Wonga ruthlessly exploiting the poor. What isn’t considered is the idea of profligate spenders taking money with no real ability to pay. Both sides of this equation must be considered, and not just one. Otherwise these CUs are going to lose a lot of money.

    carl

    • Uncle Brian

      Carl, I think you’ve put your finger on the key point. What policy will WelbyBank apply when the number of borrowers who can’t afford to keep up their scheduled repayments reaches a level that the lending institution itself can no longer afford to keep rolling over free of charge?

    • dannybhoy

      Well said Carl.
      As Christians we like to believe the best of people
      (Peter Sellers in “Heavens Above!” illustrates this beautifully. http://www.imdb.com/title/tt0057134/ )
      The parable of the unjust steward springs to mind..
      “And the lord commended the unjust steward, because he had done wisely:
      for the children of this world are in their generation wiser than the
      children of light.”
      Luke 16:8
      It is not wrong to consider then pray about the likely outcome of a well intentioned impulse. I often want to do or give, but when I stop to ask the Lord about it, He may say not to.

    • Terry Mushroom

      Carl

      I work for a housing association and have seen, first hand, the effect that payday lenders have on people’s lives. Some are very nasty indeed.

      Credit Unions lend at a reasonable rate, based on an assessment of the ability to pay back. My housing association works closely with some and encourages tenants to use them.

      Credit Unions in the UK are authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. These are the same regulators which supervise the banks and building societies. Regulation requires Credit Unions to submit regular financial reports and to meet strict requirements and rules. Key members of staff and elected volunteers involved in the running of the Credit Union must be approved by our regulators.

      I agree that the Church should not set one up.

      • carl jacobs

        Terry Mushroom

        I don’t dispute that payday lenders are a noxious weed on the economic landscape. But if 78% of their clientele are using loans to buy food, then that 78% shouldn’t be loaned money at any rate. A loan is not mission work. That’s really my point. A Credit Union no matter how ethical still has to meet certain minimum revenue returns. Bad risks must therefore be reflected in high interest rates. Otherwise, you are going to have to subsidize their loans by attaching costs to other customers – or lose money. Ethical practices won’t keep the doors open in the face of bad financial decisions.

        I will say it again. A loan is not mission work.

        carl

        • Terry Mushroom

          Carl

          As I said above, I agree that the Church should not set them up.

          I suspect that we are two countries divided by a common language over what a Credit Union is. To know more about the UK model, have a look at one I know best. See solentcreditunion.co.uk

  • TimeForTea

    Wonga is a bank that loans money. As far as I’m aware it has never claimed to be a Christian organisation, if what it does is immoral it’s not a Church problem.

    Why target Wonga when all the banks’ loan people money who cannot afford to pay it back? Look at the horrendous debt figures this country has as a nation and in personal debt. Wonga is not the problem.

    The world is a cruel, harsh place ruled by Satan. Christians are not of this world and neither should the Church be. It is Christ who comes to give the weary rest. He is sufficient for everyone’s needs. All anyone has to do is ask that of Him.

    The Church is supposed to be saving souls. It is not a bank. Christ will not come back and ask anyone how healthy their bank balance is. He will come and ask how healthy their relationship with Him is. The Church needs to be busy doing His work when He arrives. There are much better things to focus on in this day and age than Church credit unions…..nationwide repentance perhaps? Hmmmm……

    • ” …. if what it does is immoral it’s not a Church problem.”

      If you believe that, then you’re reading a different bible to Happy Jack.

      • carl jacobs

        He’s right about this, though, Jack. A church should never get into the business of lending money. The borrower is the slave of the lender. The church shouldn’t put itself into that kind of position over someone.

        carl

        • Agreed ……….. the Church should give, not get into the business of lending at interest. However, are collective credit unions lending institutions? Jack doesn’t know.

          • carl jacobs

            Jack

            I don’t know if a CU in the US is the same as CU in the UK. In the US, there are different laws governing CUs than banks. Banks think CUs have an unfair advantage. I don’t really understand the legal difference. As far as the depositor is concerned, a CU performs exactly the same function as a bank. I have been a member of a Credit Union almost my entire adult life. I don’t think I have had an actual bank account since the early 90s.

            carl

          • Hi Carl,

            Credit unions tend to be mutual, meaning they’re owned by the depositors, not external shareholders. They tend to operate locally, where they are based and don’t lend outside of their deposit base. Also they can’t borrow on the money market, unlike banks. They were traditionally (like building societies, or thrifts / savings and loans as you call them) set up for working-class people who couldn’t get access to traditional banks.

            I think that’s right, but the US could be different.

          • Hi Carl,

            Credit unions tend to be mutual, meaning they’re owned by the depositors, not external shareholders. They tend to operate locally, where they are based and don’t lend outside of their deposit base. Also they can’t borrow on the money market, unlike banks. They were traditionally (like building societies, or thrifts / savings and loans as you call them) set up for working-class people who couldn’t get access to traditional banks.

            I think that’s right, but the US could be different.

          • dannybhoy

            I personally have no problem with credit unions that are set up to help people, or rather, whose objective is to help people by lending money at very modest rates.
            We live in an imperfect world. Part of our calling is to be salt and light in the world. Christians have made great contributions to society in all kinds of ways. One of our many Christian joys is giving to another anonymously.
            Why anonymously?
            To protect the dignity of the recipient and the privacy of the giver.
            In the world of commerce from which we all benefit lending money is an enabler. To simply give money in such circumstances is to invite abuse. To lend at a modest rate encourages responsibility.
            What the lender does with the interest is between him/her and their God.
            Wonga and any like it are abusers of mens’ dignity and careless of their circumstances.
            Then there are governments who have the power to allow or ban….
            They also have a responsibility.

      • TimeForTea

        I’d welcome a biblical perspective then of why is this a Church problem?

        • TimeForTea

          He cast the money lenders out of the temple, not out of Jerusalem….

        • carl jacobs

          What do you mean by “Church problem?”

          carl

          • TimeForTea

            In my original post I was referring to the The Church as in the body of Christ, and the problem being legal but questionable businesses.

            Thinking about it in this particular case, I mean both ‘The Church’ as in the body of Christ and ‘The Church of England’.

            The Church of England should not become and money lender and Wonga is not its problem. Winning souls to Christ and teaching the bible should be its primary function.

            I don’t think money lending is a business that the body of Christ should be concentrating on. There will always be businesses that prey on the poor, deceive and practice wickedness both legal and illegal, that is the world. We are to love (that being an action and not a feeling) the weak, the poor, the defenceless, those who no one else will speak for. However to think that we should be concentrating on running all pimps, loan sharks, con-men, pornogrophers, bullies, drunks etc. out of business is ridiculous. Christians should be demonstrating what we have is different to all of that. To show that no one needs any of them and that the Lord is sufficient for everyone’s needs, not the bankers, the government, the CofE or anyone else.

          • It’s not a question of either “concentrating” on “running all pimps, loan sharks, con-men, pornogrophers, bullies, drunks etc. out of business ” or “demonstrating what we have is different to all of that”.

            It’s a matter of and-both.

          • carl jacobs

            TFT

            The Church influences by moral persuasion. That’s a different responsibility from (say) actively lending money. There are many areas of life beyond the primary responsibility of the Gospel upon which members of the church my comment with the intent of exercising influence. To say these areas of life are “not the church’s problem” is simply wrong. It would mean abdication in the face of wrongful behavior.

            carl

          • TimeForTea

            Carl,

            Aside from the fact that as far as I can tell pay day lenders have a function whether we like it or not and are probably not going anywhere, who does the The Church Influence by moral persuasion? The world is not being run these days but the norms many were used to. It’s value relativistic more so now than it’s ever been no? Moral persuasion hasn’t done anything for the UK abortion, drinking, lending, or homosexuality laws other than perhaps delay the event has it?

            I’m not saying we should just ignore them, these things are functions of the world though and being active and trying to compete as a bank on that pitch just seems like wasted effort.

          • dannybhoy

            I believe in the dignity and value of work. Christians should I think push for a society in which work is available for all and all work pays a decent wage.
            The man who sweeps the streets does an important job. He ir she should get a wage which allows them to meet all their financial obligations and allow for some pleasures.
            I am against the exploitation of anybody.

        • Proverbs 22:16
          “Whoever oppresses the poor to increase his own wealth, or gives to the rich, will only come to poverty.”

          Proverbs 14:31
          “Whoever oppresses a poor man insults his Maker, but he who is generous to the needy honors him.”

          Proverbs 29:7 ESV
          “A righteous man knows the rights of the poor; a wicked man does not understand such knowledge.”

          The bible declares that God demands social justice – that the good of creation is for the benefit of all. If the Church cannot witness this, then it is failing in its mission.

          Isaiah 1:17
          “Learn to do good; seek justice, correct oppression; bring justice to the fatherless, plead the widow’s cause.”

          Micah 6:8
          “He has told you, O man, what is good;
          and what does the Lord require of you
          but to do justice, and to love kindness.”

          Proverbs 31:8-9
          “Open your mouth for the mute, for the rights of all who are destitute. Open your mouth, judge righteously, defend the rights of the poor and needy.”

          Psalm 82:3
          “Give justice to the weak and the fatherless;
          maintain the right of the afflicted and the destitute.”

          Amos 5:11-15
          “Therefore because you trample on the poor
          and you exact taxes of grain from him, you have built houses of hewn stone, but you shall not dwell in them;
          you have planted pleasant vineyards, but you shall not drink their wine.”

          Ezekiel 16:49-50
          “Behold, this was the guilt of your sister Sodom: she and her daughters had pride, excess of food, and prosperous ease, but did not aid the poor and needy. They were haughty and did an abomination before me. So I removed them, when I saw it.”

          Happy Jack could go on …. and on … which would be most unlike him.

          He agrees the Church’s efforts should not substitute for just public and business policies. Christian charity is not a sign of success but feeding the hungry when others abandon their responsibilities.

          • CliveM

            We are required to work for the kingdom of God “on earth as it is in heaven” as individuals as well as a community. The Church’s role is not only to save souls, but also to aid this work.
            You are right in what you say HJ.

            Ps any news?

          • Getting occasional text messages from father -to-be.
            Latest update: “8cms and ‘waters broken’.”
            Little duckling is taking his/her time. Must be the cold weather. Feeling and praying for my daughter …. labour now in excess of 24 hours.

          • CliveM

            Hope it speeds up for you all. It will be a nerve wracking time.

          • dannybhoy

            HJ
            My prayers are with you your daughter and her husband at this anxious advent.

          • TimeForTea

            HJ

            Let me say up front I’m not trying to defend these guys. I don’t like them any more than anyone else. There are some terrible practices lies and deceit (fake solicitors letters, intimidation etc.) which they have been punished for.

            However, to say that to lend money, at an agreed rate no matter how punitive is wrong is not really fair. I mean, are we going to shut down banks on a moral basis because they lend to people who can’t pay it back? What are we saying about this countries horrendous debt that pay for services that are unfunded? What level of irresponsibility is that?

            Just some quick thoughts on some of those verses:

            Proverbs 22:16
            “Whoever oppresses the poor to increase his own wealth, or gives to the rich, will only come to poverty.”

            Who takes the oppressor to poverty? God or man?

            Proverbs 14:31
            “Whoever oppresses a poor man insults his Maker, but he who is generous to the needy honors him.”

            Christians should be generous to the needy, not Wonga?

            Proverbs 29:7
            “A righteous man knows the rights of the poor; a wicked man does not understand such knowledge.”

            Is Wonga a righteous man? Is God expecting him to know the rights of the poor?

            ‘The bible declares that God demands social justice – that the good of creation is for the benefit of all. If the Church cannot witness this, then it is failing in its mission.’

            Is God a Labour voter 😉 ? Of whom does he demand social justice, is it of the world? If it is, I would say He is not doing a very good job. I see little social justice around the world these days and what is left is being eroded at a frightening rate. There will be a time when Satan is bound when Christ will rule from Jerusalem and even then man will rebel! He expects Christians to deal justly in their affairs, I do not see that He expects this from the wicked.

            Isaiah 1:17
            “Learn to do good; seek justice, correct oppression; bring justice to the fatherless, plead the widow’s cause.”

            Are Wonga users oppressed? If they borrow should they not pay what they owe, even if that is to most of us unreasonable? Do they not enter a contract? If you enter a contract God will expect you to honour it no?

            Micah 6:8
            “He has told you, O man, what is good;
            and what does the Lord require of you
            but to do justice, and to love kindness.”

            He has said that which is good and what the Lord requires. It’s Wonga lending money which is not done under the name of Christ.

            Proverbs 31:8-9
            “Open your mouth for the mute, for the rights of all who are destitute. Open your mouth, judge righteously, defend the rights of the poor and needy.”

            Psalm 82:3
            “Give justice to the weak and the fatherless;
            maintain the right of the afflicted and the destitute.”

            Is justice to not lend money to the weak?

            Amos 5:11-15
            “Therefore because you trample on the poor
            and you exact taxes of grain from him, you have built houses of hewn stone, but you shall not dwell in them;
            you have planted pleasant vineyards, but you shall not drink their wine.”

            God is judging those who trample on the poor. He will deal with them I think is what is being said there?

            Ezekiel 16:49-50
            “Behold, this was the guilt of your sister Sodom: she and her daughters had pride, excess of food, and prosperous ease, but did not aid the poor and needy. They were haughty and did an abomination before me. So I removed them, when I saw it.”

            God destroyed Sodom by fire and not any man. It wasn’t brought down by worrying about it’s financial system or prayer by the righteous.

          • Not sure why you’re challenging the meaning of those biblical quotes.

            Happy Jack is not calling for social revolution, just that the Church witness God’s will that the good of creation is used for the benefit of all and exercises influence to build a just society.

          • TimeForTea

            HJ

            The conversation was about Wonga and the Church’s responsibility in relation to it which I asked for a biblical perspective on…

            I’m not challenging the role of the Church in the world, I’m challenging it in relation to Wonga. That was why.

          • Then we’re probably at cross purposes.

            Jack considers Wonga immoral in its trading practices. The Church should critique both this and the circumstances whereby some people have to depend on this exploitative company.

            The Old Testament prophets and Christ’s words reveal a God who wants a just world where every person, who is made in His image is treated with dignity and respect and not used to feather other people’s nests.

      • B flat

        There is a confusion of reactions to different evils here, and i am not free of this confusion myself. Until the late 19th century, the Roman Catholic Church condemned the practice of lending money at interest as usury. Does Church teaching change? Can it do so? they ask in other places just now. Was it CS Lewis who pointed out that perhaps our economic ills would not have grown so bad if we had obeyed the scriptural prohibition of lending at interest?
        The Gospel of Jesus Christ certainly teaches (Luke 6:34-35) that lending to those from whom one expects repayment is NOT an undertaking for believers (as believers) and seems to make Archbishop Welby’s humane initiative quite useless as a an activity for the Church. It may even open a new road for undermining its foundation on Faith in Christ, and on it faithfulness to Scripture. This last possibility is not my business to comment on at all.
        .

        • No …. The Church did not condemn all loans at interest which is not the same as ‘usury’.

          Session X of the Fifth Lateran Council (1515) gave its exact meaning:

          “For that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk.”

          • good luck with that distinction

          • Oh, Happy Jack has made it many times with liberal modernists who attempt to use this an example of the Church changing doctrine so they can justify a change in teaching on contraception, abortion, divorce and homosexuality.

  • Marie1797

    Wonga and others who exploit the poor should go out of business and it’s
    the government’s duty to ensure they do. How otherwise can the
    Osbourne and Co preach equality when they allow their friends and
    crony companies, corporates and ‘equity investors’ to borrow money at
    0.5% or at 0% from their crony banks to buy companies which they
    proceed to strip of their assets by paying themselves huge bonuses
    and salaries which are salted away from the British tax man.

    They leave the company to struggle. It can’t afford to pay decent wages,
    driving people to payday lenders, or most likely goes bust putting
    more people onto benefit, as it can’t keep up with the debt
    repayments that was put on the Co. balance sheets. Phones4you being
    the latest where 5600 jobs were lost. Had it not been plunged into
    so much debt it would have had money/flexibility to invest in keeping
    up with the changing market ensuring its survival.

    • dannybhoy

      Good points Marie.
      I believe in capitalism with a conscience. I don’t understand how for example the CofE could ever have countenanced buying shares in Wonga, nor successive governments allowing these immoral antisocial organisations to flourish.

      • CliveM

        I think one of the reasons may be that the Govt don’t want to drive people into the hands of the loan sharks. Where more maybe at risk then a court summons.

        • dannybhoy

          Clive,
          i could tell you a very personal story of how my wife and I lost everything through the incompetence of a bank manager, and that person was retired early by his bank with a golden handshake whilst we were left with nothing.
          In this world sh- yucky stuff happens.
          As Christians all we can do is give it to the Lord.
          I would never ever have anything to do with an organisation like Wonga. Our bank manager was incompetent. The actions of his employers was reprehensible. In general though banks still try to be responsible.
          Wonga type organisations trade on human irresponsibility, ignorance or calamity.

          • CliveM

            Dannyboy

            I am sorry to hear of how badly treated you have been. I am not defending Wonga and its ilk, just pointing out for some the alternative might be worse. I think CU’s may help some, I think really the discussion here is how involved does the Church get.

    • well that’s one view on phone4u. from where i’m sitting the phone operators have decided to no longer sell via this old bricks and mortar retailer, which is their perogative – they use their own stores or sell online, and keep more of their margin. not sure what extra money would have done to help p4u

      • Marie1797

        With a healthier balance sheet they could have diversified into buiding new infrastructure and networks in areas with no mob and broadband coverage as well as still ofering a range of phones and networks. There are still plenty of these.

  • The Inspector General

    The Inspector had great misgivings about the CoE getting directly involved in loans right from the start. He still has. As has been pointed out, and will continue to be so, what happens when a parishioner decides “can’t pay, won’t pay”. It would have been far more acceptable if a not-for-profit organisation, independent of the CoE, had been set up to which priests could direct the needy. As it stands, the money changers in the church situation leaves an awkward feeling.

    As for scurrilous Wonga itself, the Inspector has received reports that its agents are targeting the young (…and that more than likely means stupid as well…) in campus’ across the country with the idea of getting these halfwits to borrow a few hundred to throw a party. Of course, the chances of the debt and substantial interest being repaid in full at the due time are probably remote, and so another ‘pay day loan’ addict is born. Such is life, and the unscrupulous around who would make a living from bleeding the vulnerable and senseless at regular intervals…

    • Patrick G Cox

      Inspector, there is a big difference between a Credit Union and the sort of operation Wonga runs. For one thing the ‘shareholders’ are those who deposit money with it, and they are more rigorously regulated than a ‘normal’ bank or lender.

  • The Inspector General

    One must continue to assert his unease, in the hope that its urgency is noted. Yes, the church in the past doled out goods, services and money to the poor. That was charity. It was understood to be that, and dates not from Christ’s time but well before.

    To give and then to expect back is in ones far from humble opinion to be completely novel, completely alien and completely unwarranted. In other words, it is not Christian. The question is, should it, at this late stage after 2000 years, become so. And should it be in the remit of just one man, the Archbishop of Canterbury by himself, to decide.

    • Politically__Incorrect

      Inspector, I may be wrong on this but I understood the CofE is allowing credit unions to use certain premises belonging to it, but not actually operating as the bank or lender itself. I would agree that lending money does not sit well with the Gospel and the Church should restrict itself to charity.

      • CliveM

        PI

        that was my belief as well. Apart from any other reason I think burdening further over worked Priests would not be a good idea.

        Let’s hope your understanding is right.

      • The Inspector General

        One thanks you P_I. The CoE is not underwriting operations then ?

      • The Inspector General

        Then again…

        Hello vicar. Here, have a look at this. Good innit
        Have a look at what, my girl
        My new tattoo. A red heart entwined with the letters M U M
        It’s rather, erm, obtrusive
        Yeah, took ages too. Cost a hundred
        Saints preserve us ! Who paid for that. Mum ?
        Nah, YOU did. Don’t worry, I’ll pay it back bit by bit
        And your little girl ? Not going without as a result, one hopes
        She’s had her spaghetti on toast. I always make her some, whatever happens. Must go. Ta ra

        Oh Lord Jesus, guide me in your divine wisdom in this your servants hour of need. Tell me, what am I to do with these f_____g peasants ?

        • Inspector, have you ever considered entering the priesthood?

          • CliveM

            Or an enclosed order of monks?

            I can see it now, tonsured and gowned. What would be a really nice, strict order.

          • The Order of Cistercians of the Strict Observance, more commonly known as ‘Trappists, a cloistered, contemplative order.

            Trappist monks speak only when absolutely necessary. St. Benedict believed speech disturbs closeness with God and tempts a person to exercise one’s own will instead of the will of God.

            The Inspector should note in particular that the order believes speech that leads to unkind amusement or laughter is seen as evil and is banned.

          • dannybhoy

            Lol!
            Any news HJ?
            I can’t stand the suspense…..

          • No ………… still waiting and now getting anxious.

      • Uncle Brian

        Gillan Scott says in his post that it is “a network of credit unions run by churches around the country. The venture … has been named the Church Credit Champions Network (CCCN).” It clearly entails a considerable degree of involvement by the C of E, going much further than just renting out office space.

  • alternative_perspective

    Considering many of the CoE’s opinions maybe the Church Credit Champion Proliteriat would be better and closer to the mark. Rock on comrade!

  • DrCrackles

    My understanding of Credit Unions is that they need debtors to collect interest payments as these are the only source of income. The rates of interest generally is higher than can be found from other lenders.

    I doubt Credit Unions are the answer, since they will do nothing to discourage indebtedness. It is like asking the GP to become a ‘pusher’.

  • Please join me in thanking God for the safe arrival of my granddaughter …….. after a 24 hour+ labour ………… mother and baby both well …………. grandparents survived the rigours of the birth too ………..

    YIPPEE !!!!!!!!!!!

    Now where did Jack put his bottle of single malt and that fine cigar ……….

    Ps
    Open tab in the bar for virtual drinks all round ……….

    • carl jacobs

      Congrats Jack.

      Glad it turned out alright.

      carl

      • Thank you, Carl. A poem dedicated to Lucy, perhaps?
        *chuckle*

        • carl jacobs

          Lucy’s in the sky with diamonds.

          carl

          • Lucy shines a light
            illuminating the hearts
            of those who see her
            welcomed as a gift from God
            whose angels watch over her

          • Shame the name Lucy is so associated with this song that misconstrued its true meaning.
            She is a little diamond, sparkling brightly.

            (Ps – Jack still has both of his arms intact)

          • carl jacobs

            Jack

            [The light dawns]

            I thought you said the child was named Marie? Is she named Lucy then?

            carl

          • Her name is Lucy ….. .Think this confusion arose when talking with Marie 1797 on another thread. At that time she was just “baby” with no name. Parents named her yesterday.

    • CliveM

      Well done Happy Jack I’m sure you will be a very proud and doting Grandfather.

      • Thank you, Clive. Yes, Jack coped rather well with the rigours of the birth ….

    • Hi happy Jack,

      Congratulations to you, your daughter and husband & the rest of your family (:

    • Uncle Brian

      Congratulations, Jack!

      • CliveM

        Good idea, forgot to place my order. Make that two.

      • Thank you, Brian.

    • Marie1797

      A glass of English sparkling wine for me please Jack. Cheers!

  • Patrick G Cox

    My respect for ++Justin continues to rise. At last he is positioning the jolly old CofE where it should be, serving the gospel and at the heart of communities.

  • Hi Gillan,

    I’m confused big time. Wonga is immoral for lending to people who can’t afford to pay the money back and those who borrow do so to buy food, but Anglican credit unions run by the alpha course lot are going to be a paragon of saintly virtue, by lending to those same people?? If they are going to be into responsible lending , that isn’t just about the % interest rate of the loan or how high the interest rate is , but whether or not the borrower can afford to pay the money back.

    If the Anglican credit unions are going to be responsible they won’t be lending a bean to those 78% who use payday loans to buy food, ie the bulk of payday loan clients to whom this scheme is apparently targeted for. Because if they can’t afford to eat, how can they afford to pay back money, even at a low interest rate? But even if they do lend the money, what will they do when they start to default? Write off the debt and see the institution close or take them to court with all the bad publicity this will entail?

    Access to credit isn’t the issue. Access for anyone to have an account (with no overdraft or borrowing ) would be better as practically everyone, even those on benefits needs to have an account nowadays. But I simply cannot see how this is going to work if it’s about getting payday loan clients into credit unions.

    Besides which there are better things to do with the capital required to set up a lending institution. The money would be better spent on giving people food, helping them to get out of the poverty trap via funding training courses, funding child care for single mums, to think of a few activities this money could be spent on. In respect of the internal community one doesn’t need to provide money, just be there to help. For example if a member of the community is in financial difficulties, invite them round for dinner, see what you can do to help financially or with food shopping. That seems to me a better way than religions getting involved in banking/lending.

    • Credit Unions work in a different way to payday lenders. You have to be a member of a credit union to use them. There is a relationship involved so that those seeking to borrow are not anonymous. The rates are lower, but also ability to pay is monitored more closely.

      Some people who are regular users of payday loans will be paying out significant money on interest payments monthly that could be used for food, etc. A spiral of debt and inability to repay can happen much more quickly and severely through payday loan schemes.

      The best social action churches will be not just be running credit unions, but foodbanks and other services too. That means the root cause of someone’s situation and difficulties can be addressed to get them back on a stable footing rather than just putting sticking plasters on things.

      This is what good news for the poor looks like to me.

      • Hi Gillan,

        I’m aware of the difference between a credit union and a bank/payday loan company ,as I discussed this below (my comment to Carl Jacobs).

        I notice you haven’t responded to my concerns here, but ill repeat them anyways:

        I’m not denying that the interest rates charged are excessive. I’m simply noting that if you’re going to base a business on lending to people who need access to credit to pay for food, but at much lower interest rates, this business is doomed to failure. This business will also need a stable deposit base, ie those who actually save, rather than spend. If I thought my savings were going to pay for loans to help people buy food it’d not a place I’d consider depositing money in.

        The big issue that hasn’t been addressed is that if you are saying credit unions are much better because they are face to face lenders, that implies the 78% of people who used payday loans for food will be excluded from borrowing. Therefore you haven’t actually solved the problem that’s been put to us in this article and the solution isn’t a solution as it will ignore the people who allegedly need the credit. Therefore from the view of helping “the poor”, this simply isn’t going to work*, but to do that anyway, you don’t need to throw credit at people or to start up a bank.

        Using a debt advice charity can help people reorganize their finances and they can arrange for debt repayment plans, which means they won’t get hounded by creditors and can pay for food and the community can help in other ways, that don’t require lending of money, but payment in kind. True this means access to credit is severely limited, but credit isn’t the bee all and end all of life.

        (*We know why , example: much of the problems in the US banking system arose because banks were told to extend credit to these very same ‘sub prime ‘ borrowers, with disastrous results).

        It seems to me that issues of high interest rates aside, the real issue is trying to promote a particular brand of banking, as if a mutual is better “morally” than a shareholder bank. Which I’d say fair enough until one realises mutuals can make a hash of banking as well, as recent history has shown us.

        • GraceGuerilla

          I’m not an expert on this, so I’m not avoiding answering…I just don’t know the specifics. However, I’m aware the CUs are often run by communities and linked to CAB. If they’re run by churches, they can also be linked to Christians Against Poverty (free debt advice) and Foodbank too. So it’s often a holistic response. I believe the idea is that people can fall into a ditch, ie they lose their job and have to wait for benefits (as an example) but long term in the UK, no one should have to consistently borrow money for food. If that’s the case, it’s because there are other problems such as debt, loan sharks, no ability to budget etc. a responsible credit union wouldn’t lend money to a person on a regular basis for basics like food, but would refer them to an agency who could help tackle the root of the problem. If it’s a debt trap, then negotiations with creditors can be made etc. the difference of course with payday lenders is that they are set up to make profit for their shareholders. If someone gets into a mess, that’s kinda tough so the debt collectors are called in. It’s that kind of spiral which can leave a person desperate, confused and even suicidal, I’m sure.

    • GraceGuerilla

      I think (though could be wrong) that credit unions are a little more personal and you have to meet with an advisor. The Wonga system was fill in a few questions online, and bingo, here’s your cash. They’ve of course now had to cancel a bunch of loans because of poor lending practices. Credit unions are run differently (I believe)…a little like a cooperative where the members get a share. You can also save with them as well as borrow and it’s more relationship-based.

  • Uncle Brian

    For any lending institution, no matter whether it’s run by professional bankers, the C of E, the public sector, the private sector, or the mafia, there’s always the prospect that the number of borrowers who can’t afford to keep up their scheduled repayments may one day reach a level at which the lending institution itself can no longer afford to keep rolling over the nonperforming loans free of charge. It would be interesting to know what policy the CCCN has decided to adopt to deal with that eventuality, and how that policy contrasts with what Wonga has been doing. Is it just a question of charging less exorbitant rates, or is the mechanism itself different in some significant way?