MSE News: Church in bid to 'compete' Wonga out of existence

OneLife_OneShot

iolanthe07 wrote: »

If churches had to pay property taxes on their 16,000 church buildings, then of course they would be bankrupt within days..

I don't see why they should have to get off with paying property tax just my own opinion when thousands of others have to.

Saying that but what this guy is doing I agree with even though I really disagree with churches in general, promotion of credit unions is a good thing.

GhIFA

antrobus wrote: »

Odd. The latest figures I could find (2010) showed the COE running at a loss.

When just looking at income and expenditure yes, but it holds billions in assets.

iolanthe07

I don't see why they should have to get off with paying property tax

No charity pays property tax. Churches are public buildings, held in trust for everyone and for future generations. You might as well say that the National Triust should have to pay property taxes

When just looking at income and expenditure yes, but it holds billions in assets.

Its asset portfolio of around £5 billion is, to all intents and purposes, a pension fund held in trust for paying pretty miserable pensions to the many thousands of clergy pensioners and widows.

antrobus

GhIFA wrote: »

When just looking at income and expenditure yes, but it holds billions in assets.

The Church Commissioners own billions in assets. About 5.5 billion, I think. But the Church Commissioners is both a charity and a statutory body, run by trustees. I don't know whether or not the law would permit them to divert some of these billions to fund a deliberately loss making lending business.

iolanthe07 wrote: »

...Its asset portfolio of around £5 billion is, to all intents and purposes, a pension fund held in trust for paying pretty miserable pensions to the many thousands of clergy pensioners and widows.

Well, yes. Without the income from the 5.5 billion the COE would have made an even bigger loss.

The point is that the COE isn't really in the position to start funding a payday loan competitor. It doesn't intend to fund a payday loan competitor. All it intends doing is (a) encouraging parishoners to volunteer to work for credit unions and (b) inviting credit unions to use church buildings.

mjm3346

C of E is an indirect investor in Wonga :rotfl:


http://www.ft.com/cms/s/0/1855c6bc-f544-11e2-b4f8-00144feabdc0.html#axzz2a5jTtTKv

Credit-Crunched

mjm3346 wrote: »

C of E is an indirect investor in Wonga :rotfl:


http://www.ft.com/cms/s/0/1855c6bc-f544-11e2-b4f8-00144feabdc0.html#axzz2a5jTtTKv

What a classic egg on your face, bite the hand that feeds you!

MrsBartolozzi

It's been a long time since I set foot in a church, but I seem to remember a bible story about Jesus throwing the money lenders out of the church. Why has god's representative seen fit to let them back in?

jamesd

ashleyriot wrote: »

it is my understanding that companies can write off bad debt against their tax bills - I know certainly the big banks do so I imagine Wonga etc. do as well.

They can but that is only the tax, not the whole loss. Still requires adding the cost of the bad debt to the APR that other borrowers pay somehow.

rodgerramjet wrote: »

I dont agree with the statements that the interest is so high because of the default rates. They dont plan on people not paying they just realised that with banks not lending and people needing money that they could just charge what they want. Plusethey like others place charges on when a default occurs.

Then you need to learn more about how lending really works. The borrower is always charged a price that includes at a minimum an allowance for the average bad debt expected by borrowers of that general credit rating. Charges when a default happen are nice but they don't help when the person is unwilling to pay, dead or otherwise not able to pay.

To give an example here, borrow £15,000 via Zopa as a B grade borrower and you'd probably have a non-refundable fee of over £1,000 added to your loan. Most of that is to go into a pot to cover bad debt. Now, personally I think it's unethical to do that with a non-refundable fee, in part because people often overpay or repay early but are charged the fee as if they kept the loan for the whole term. But it does illustrate just how expensive providing for bad debt is even for borrowers with good to excellent credit and that it's always the borrowers who pay.

For a payday lender this isn't the whole reason for higher charges. There are also costs of loan setup that are fairly fixed and that inevitably make up a larger part of the total cost of a short and small loan than a big and long one. And then, of course, profit, restricted to whatever level competition in the market allows to be viable.

It's worth a look at how many banks and building societies are competing in the payday loans market. I don't know of any. They are in the business of making money so it's worth thinking about what is causing them to choose not to participate. Borrower credit quality will be one of the big issues, as will costs.

A note added on Friday: the Archbishop commented that even credit unions would have to charge 70% interest rate to avoid making a loss on payday lending. Their interest rates are currently capped by law at no more than about 26%.

Eco_Miser

MrsBartolozzi wrote: »

It's been a long time since I set foot in a church, but I seem to remember a bible story about Jesus throwing the money lenders out of the church. Why has god's representative seen fit to let them back in?

You mis-remember: it was money CHANGERS Jesus threw out of the Temple. They changed ordinary Roman money into the old Hebrew coins that had to be used for offerings, and no doubt made a profit on the transaction.

fatbelly

Here's another link to the 'church invests in Wonga story'

http://www.guardian.co.uk/business/2013/jul/25/church-england-stake-wonga-backer

It seems to me that proper competition to the payday lenders would be a good thing. I'm not sure that as things stand the Credit Unions could provide that. with or without the church's backing. They have their lending rates capped by statute, Payday lenders don't.

Could Chairman Dave be persuaded to take an interest in this in the run-up to the next election rather than the current smokescreen of spurious issues?