Pay-Day Loan? Ask the Vicar!

Christ throws the money-changers out of the Temple

Christ throws the money-changers out of the Temple

The Archbishop of Canterbury has declared war on pay-day loan company Wonga.  But in a move that should delight the hearts of those who believe in free markets, he proposes to attack them not with calls for regulation, or abuse, or criticism or moral obloquy, but with direct competition.  Archbishop Justin Welby proposes to open Credit Unions — simple local financial cooperatives — operating out of church premises to offer loans at lower rates.

It’s certainly true that Wonga’s rates are eye-watering.  But then they’re in the business of offering small, short-term loans.  The administrative costs of their business model are bound to be high, and their bad-debt rates as well.  Imagine you wanted say £100 for a week to tide you over.  It would hardly be worth Wonga’s while to answer the phone unless they stood to make say a tenner out of the transaction.  Fair enough, you might say.  But look at 10% a week as an annual interest rate at compound interest over the period, and you’re over 10,000 percent (if I’ve done my sums right).

Then the administration of loans might be a challenge for the Church.  I Tweeted “If Wonga’s rates are too high, there’s a market opportunity for a lower-priced competitor”.  Someone responded “Yes, but will your local church be able to approve a loan in fifteen minutes?”.  That’s a problem for the Reverend Welby.  But unusually for a Churchman, he has experience in the City, so hopefully he knows what he’s doing.  If his project is to succeed, he needs to be competitive on service as well as price.

But those few of us who still remember such things cannot help but be ruefully reminded of that story from the New Testament, The Gospel of Saint Mark Chapter Eleven.  “And they came to Jerusalem: and Jesus went into the Temple, and began to cast them out that that sold and bought in the Temple, and overthrew the tables of the moneychangers ….and he taught, saying unto them My House shall be called the house of prayer, but ye have made it a den of thieves”.

It seems that bankers were no more popular then than they are now.

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3 Responses to Pay-Day Loan? Ask the Vicar!

  1. Neil Craig says:

    I have sympathy with Welby’s subsequent discovery that his church are, several levels down, Wonga investors and the consequent public ridicule. It is difficult to know all the investments of all your pension funds. Otherwise you could run them yourself.

    If the church can run a loan operation good luck to them. I suspect it will turn out not to be that easy.

    On the other hand I don’t think Wonga would find running a church that easy, despite the tax advantages.

  2. OK – out of the closet – I am a Catholic.
    As I read the Psalms, I get the impression that the rich have always “ravished” the poor when “he getteth them into his net”. Nothing new there then!
    But Jesus constantly went round healing and helping people too. When the fishermen/disciples couldn’t pay a bill, he wittily advised them to look in a fish’s mouth! “You cannot serve two masters” either, can you.
    I read all this as acceptance or Free Will and standing by ready to do what we can with the fall-out.

    But that didn’t stop me (and the rest of our church too) signing a petition to ban a loan shark from setting up in our town!.

  3. Pete Hodge says:

    As a Christian from a strongly biblical perspective, the one thing that has astounded me most about this story is the huge sums of money involved. Billions of pounds and also in the Methodist church. No doubt we will find the Roman Catholic church in a similar situation.

    As I say, I am a supporter of the teachings of the Bible, and that precludes the acceptance of vicars, bishops popes etc. These have nothing to do with the church of the New testament. I have been an evangelist and a missionary, and as a result I was supported by various churches to do this work in a full time capacity. Consequently, those congregations did not have to provide me with a pension, unless they wished to. They were not businesses, and the funds they received through their contributions were intended for the various activities of the church.

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