Church wants to force Wonga out of business

Roll of 20s

The Archbishop of Canterbury has attacked Wonga, claiming the Church of England will provide assistance to credit unions to try to force the payday loans firm out of business.

The Most Rev Justin Welby told Wonga chief executive Errol Damelin he wants the church to help expand credit unions so that the sector offers serious competition to Wonga.

There are around 500 credit unions operating in the UK. The predominantly local organisations are owned by their own members and offer low-cost loans and other financial services to vulnerable people who struggle to open a traditional bank account.

In an interview with Total Politics magazine, the Archbishop said: "I've met the head of Wonga and we had a very good conversation and 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's a businessman, he took that well."

He added: "We've got to have credit unions that are both engaged in their communities and much more professional, and the third thing is people have got to know about them. It's a decade-long process.

Find the best loan for you

"We're putting our money where our mouth is, we're starting a Church of England staff credit union. You've got to have a corporate interest body to identify who's members of the credit union. We're starting one of those so we're actually getting involved ourselves. We're working steadily with the main trade bodies for the credit unions."

Shape up

At the end of June 2013, The Office of Fair Trading referred the UK payday loans market to the Competition Commission. After a public consultation, the OFT said it, "continues to suspect that features of the payday lending market prevent, restrict or distort competition" and believes existing laws don't go far enough to tackle the root causes.

This comes after the OFT wrote to 50 payday lenders in March 2013, giving them 12 weeks to prove they were complying with existing rules or risk losing their licence to trade. While the lenders still have until the end of July to shape up, so far five lenders have exited the market.

Meanwhile, the number of borrowers getting into difficulty with payday loans is growing, according to a leading debt charity. In the first half of 2013, StepChange Debt Charity said it helped 30,762 people with payday loan debts, nearly the same amount as during the whole of 2012, when the charity helped 36,413 people.

More about

Your Comments

The sooner these payday loan companies are shut down the better - they target themost vulnerable people in society without remorse. A lotof them are being taken to acount for illegal retieval of money from people who have fallen on bad time when it comes to paying back More suitable loans need to be used rather than extortionate 1000% APR. I fully support the Church n shutting down these companies who sole purpose of being is to take as much money as they can from people's pocket's regardless of if they can pay it back or should have qualified for it in the first place.