Archbishop of Canterbury, Wonga and Credit Unions

The Archbishop of Canterbury, Justin Welby, has created quite a stir with his comments about payday loan company Wonga.  This is my attempt to process my positive feelings about the fact that he has spoken out about this issue, alongside other feelings of discomfort about what he said.

I agree with the Archbishop when he says that we are not aiming to “legislate” Wonga out of business. Some kind of outright ban on companies like this is not a helpful solution. For people on the most precarious of incomes, this kind of credit is often the only credit they can get. And while it might be nice to suggest that people should save up for the things that they need, unexpected outlays (such as fixing a broken down boiler), by definition, cannot be planned for, even if saving were possible.

This does not rule out some legislation which would be helpful.  Church Action on Poverty, along with MP Stella Creasy, have long campaigned for a cap on interests rates and charges and greater transparency when loans are agreed, as well as data-sharing between companies so that people can improve their credit rating and access to mainstream credit.

So while people need alternative means of borrowing money, it is great to hear the Archbishop argue that we need to expand Credit Unions, and offer the Church of England as a resource for this. And it’s clear that this is not going to happen overnight, so while Credit Unions are growing, we should continue to campaign to make payday loans better for the people who use them. For me, the worst thing about these type of lenders is the way advertise themselves. I loathe the new Wonga adverts, which normalise and sanitise a way of borrowing money which could be considered extortion. But worse is the way that people are bombarded with offers of money over and over again, without any clear explanation of what it will cost to repay.

So what’s my problem? I agree we shouldn’t ban Wonga and its like, although I think some legislation would be helpful. I agree that we should expand Credit Unions and think the church is a great resource to help do this. I think my problem is with the word “compete”. This leaves the debate firmly in the transactional frame. Yes, I know we are talking about money and debt, but the debate could be framed in terms of people instead.

Competing with payday lenders legitimises their business and puts the Church of England and Credit Unions in the marketplace. While this is a fair description of the situation on the surface, it does not deal with why the Archbishop got involved. Clearly it is not because he thinks the Church of England should be making money in this market. Rather, the church sees that people are in need, and they are suffering because of their indebtedness to payday lenders or lack of borrowing options. Churches up and down the country see this need on a daily basis, and their call to show the love of God demands that action is taken. It is not enough to feed needy people through Foodbanks, but there must be a call to change the structures that cause people to need this help in the first place. I believe the church is called, not to compete with Wonga, but show a radical alternative. To show love, and in doing so, to change the rules, to treat people with fairness and equality, and not as people whose needs make them easy to exploit. In short, I think the church should love (other people and so put) Wonga out of business.

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