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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 25th Jul 13, 9:58 AM
    • 2,324Posts
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    Former MSE Helen
    MSE News: Church in bid to 'compete' Wonga out of existence
    • #1
    • 25th Jul 13, 9:58 AM
    MSE News: Church in bid to 'compete' Wonga out of existence 25th Jul 13 at 9:58 AM
    "The Archbishop of Canterbury has told Wonga the Church of England wants to 'compete' it out of existence..."

    Read the full story:

    Church in bid to 'compete' Wonga out of existence



    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

Page 1
    • antrobus
    • By antrobus 25th Jul 13, 10:14 AM
    • 16,722 Posts
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    antrobus
    • #2
    • 25th Jul 13, 10:14 AM
    • #2
    • 25th Jul 13, 10:14 AM
    "He's a businessman, he took that well."

    Of course he did. I'll bet he found it really hard to stop himself from wetting his trousers with laughter.

    Anyway, a report here from the BBC on the story - http://www.bbc.co.uk/news/business-23433955 - which contains the factoid "credit unions make a loss on loans of less than £1,000 owing to the administration costs involved, says think tank Civitas". Since making loans of less than £1,000 is more or less what the likes of Wonga do, it's going to interesting to see what form this competition takes.

    There's probably a reason why Errol Damelin is a businessman and Justin Welby is a cleric.
    • ChopperST
    • By ChopperST 25th Jul 13, 10:19 AM
    • 1,176 Posts
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    ChopperST
    • #3
    • 25th Jul 13, 10:19 AM
    • #3
    • 25th Jul 13, 10:19 AM
    The reason Wonga et al. charge such a high APR is the high default rate. Circa 40% according to 5 live's money expert yesterday.

    I don't think the COE will be lending for long till they realise that they are losing money hand over fist.

    There will always be a market for payday lenders I'm afraid. Money is a commodity and when a commodity is in short supply, well we all know what happens...
    • bylromarha
    • By bylromarha 25th Jul 13, 10:37 AM
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    bylromarha
    • #4
    • 25th Jul 13, 10:37 AM
    • #4
    • 25th Jul 13, 10:37 AM
    Welby is a cleric, yes, but he has an army of volunteers to work this through at the grassroots level.

    Volunteers who give a damn about the poverty some people are living in and would welcome the opportunity to get involved in their lives and help find long term solutions to the short term loan problem by helping out with budgetting and the like.

    Can see CAP taking this on as part of their services.

    Wonga solve the immediate problem. Welby and gang give a damn about the long term.
    Who made hogs and dogs and frogs?
    • mjm3346
    • By mjm3346 25th Jul 13, 10:41 AM
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    mjm3346
    • #5
    • 25th Jul 13, 10:41 AM
    • #5
    • 25th Jul 13, 10:41 AM
    Excellent idea, they cannot be allowed to unfairly compete while they have all their charity tax breaks so getting the church on a business footing and paying all the appropriate taxes on income and property will save the taxpayer millions.
    • Percy1983
    • By Percy1983 25th Jul 13, 10:47 AM
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    Percy1983
    • #6
    • 25th Jul 13, 10:47 AM
    • #6
    • 25th Jul 13, 10:47 AM
    It is interesting as it is unfair competition if a charity is allowed to make a loss to offer the same service.

    To be honest I don't see Wonga as evil, if anything I would say they are one of the better in the sector and are offering a fair service.

    Yes the APR's are massive but the admin costs and defaults are also massive so fair enough.

    The problem isn't with the services but the people who are using them.

    I will add I have never used a payday lender and hopefully never will, but they do serve a purpose.
    Have my first business premises (+4th business) 01/11/2017
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    • JimmyTheWig
    • By JimmyTheWig 25th Jul 13, 10:51 AM
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    JimmyTheWig
    • #7
    • 25th Jul 13, 10:51 AM
    • #7
    • 25th Jul 13, 10:51 AM
    "credit unions make a loss on loans of less than £1,000 owing to the administration costs involved, says think tank Civitas".
    Originally posted by antrobus
    Chances are they already know this. (Or at least they will now, as I'm sure they'll read the BBC article!)
    So I think they'll be prepared for
    losing money hand over fist.
    Originally posted by ChopperST
    I think this is the whole crux of it.
    Payday loans are bad. But it's the circumstances of the people who need them that are bad, rather than the companies per-se. If Payday Loan companies were all making mega profits on each loan then it would be easy for a new player in the market to come in and undercut them, take a load of business but still make a nice profit.
    The fact that no-one has done this suggests that they aren't making mega profits on each loan.
    The charges (especially when viewed as an APR) are very high. That's because it is a high cost thing to do.

    So we either ban them (which, with the root problem not going away, will drive customers to illegal loan sharks) or leave them as they are or someone needs to come into the game prepared to lose a lot of money.
    No company is going to be prepared to lose a lot of money. If the government did it with our money people would be up in arms. But the Church of England is in a position to do this.
    If the amount of money that they lose is worth it for the misery that they save then they've done their "good deed" with their money and all is well.
  • GhIFA
    • #8
    • 25th Jul 13, 10:56 AM
    • #8
    • 25th Jul 13, 10:56 AM
    Volunteers who give a damn about the poverty
    Originally posted by bylromarha
    If only I could believe this to be true. The church is one of the richest establishments in the country. It could very well gift those in such desperate need the short-term cash, as well as providing the kind of education then needed to help avoid these problems in the short-term.

    The part of the story that stood out for me was this bit:

    "Welby, who has served on the parliamentary Banking Standards Commission, has said he plans to expand the reach of credit unions as part of a long-term campaign to boost competition in the banking sector."

    I can understand the church wanting to help people in trouble, I cannot for the life of me understand is why the church needs to run a long term campaign to boost competition in the banking sector - The cynic in me thinks that this is maybe a euphemism for the church spotting a means of making income out of people that are in desperate straits under the guise of "helping" them. (and exploiting their own "volunteers" at the same time as a source of unpaid labour).
    I am an IFA. Any comments made on this forum are provided for information only and should not be construed as advice. Should you need advice on a specific area then please consult a local IFA.
    • whitewing
    • By whitewing 25th Jul 13, 11:01 AM
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    whitewing
    • #9
    • 25th Jul 13, 11:01 AM
    • #9
    • 25th Jul 13, 11:01 AM
    It would be really funny if borrowing money from a church-run credit union potentially had an adverse affect on your chance of getting a mortgage in the future.
    When you find people who not only tolerate your quirks but celebrate them with glad cries of "Me too!" be sure to cherish them. Because these weirdos are your true family.
    • bylromarha
    • By bylromarha 25th Jul 13, 11:08 AM
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    bylromarha
    If only I could believe this to be true. The church is one of the richest establishments in the country. It could very well gift those in such desperate need the short-term cash, as well as providing the kind of education then needed to help avoid these problems in the short-term.
    Originally posted by GhIFA
    Of course its true - the average pew filler has no control over what the Church does. They care about the man on the street and their love for God prompts them to do their small part.

    Take Foodbanks as the best example recently - churches are running the majority of those.

    Gifting people money makes little difference - and people won't respond to finance classes. It's living life alongside people and showing them the small changes they, individually, can make that will turn the budget and thinking around.
    Last edited by bylromarha; 25-07-2013 at 11:10 AM.
    Who made hogs and dogs and frogs?
    • Pincher
    • By Pincher 25th Jul 13, 12:23 PM
    • 6,516 Posts
    • 2,491 Thanks
    Pincher
    Rice bowl Christians: come to church and we feed you.

    Education Christians: convert and the nuns will give you an education.

    All standard missionary tactics they employ in poor countries.


    If I was a dictator, I would be highly suspicious of this kind of Wonga Christian recruitment tactic. They can be a covert form of subversion. The Romans didn't stamp it out early enough, and look what happened to them.
    • dastep
    • By dastep 25th Jul 13, 12:40 PM
    • 39 Posts
    • 61 Thanks
    dastep
    I think the bible is clear about what exactly Christians are supposed to be doing in the world. In John 18:36, Jesus makes it clear that this earthly world system is not His. 'My kingdom is not of this world'.

    Paul writes in 1 Corinthians 2:2 "For I determined to know nothing among you except Jesus Christ, and Him crucified."

    On the subject of paying taxes, Jesus said: "Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's.

    Yes, Wonga's rates are terrible, but what on earth does this have to do with Christians? This is a political matter and the government needs to deal with it accordingly.

    The ABC should focus his business on obeying what Paul said and preach Jesus Christ crucified and nothing else, and leave the messy matters of finance and politics to the politicians and bankers.
    • ashleyriot
    • By ashleyriot 25th Jul 13, 12:49 PM
    • 89 Posts
    • 122 Thanks
    ashleyriot
    We understand that the high percentage rates that Wonga et al have surround the fixed costs of administering the loan (and factoring in bad debt etc.) so if the Church can use volunteers to complete this via a Credit Union, this cost will drop.

    It would not be right for the Church just to give money to people because there are behaviour issues the debtors need to face and deal with but being able to "unfairly" compete (i.e. smaller admin fees) against these Payday Loan companies is rather satisfying.

    Also, with my background in Zopa, 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.
    • rodgerramjet
    • By rodgerramjet 25th Jul 13, 1:29 PM
    • 25 Posts
    • 4 Thanks
    rodgerramjet
    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.

    I cant say enough about credi unions they are the way to go and they should be promoted more than they are.

    I personally believe the interest rate should be capped, but if no one used them then they wouldnt survive, alas that wont happen as people will still get desperate and take their money.

    I would like to know what banks have loaned PDL companies money to setup, I think that would make for interesting reading.
    Debt Free - July 2014

    lots of financial experts on here, wonder if they have any qualifications or use this forum to feel special....hmmm
    • OneLife_OneShot
    • By OneLife_OneShot 25th Jul 13, 1:35 PM
    • 749 Posts
    • 539 Thanks
    OneLife_OneShot
    This thread is so funny.

    I don't believe in God at all so I won't be having the church tell me who I can and can't lend from. Not that it would be Wonga or a PDL anyway!

    The church makes enough money by not paying taxes, until they pay property tax I won't take anything they try to input into anything with any great thought at all. If they want to get into financial stuff then pay taxes first. Do what Italy has done and stop church tax exemption.
    "All truths are easy to understand once they are discovered, the point is to discover them."


    • JimmyTheWig
    • By JimmyTheWig 25th Jul 13, 2:23 PM
    • 11,866 Posts
    • 11,403 Thanks
    JimmyTheWig
    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.
    Originally posted by rodgerramjet
    If it was a case of charging what they wanted then new players would come into the market with lower rates, still make a decent profit, sweep up all the customers with their lower rates and be laughing.
    Why do you think this isn't happening?
    • Percy1983
    • By Percy1983 25th Jul 13, 2:34 PM
    • 4,990 Posts
    • 7,824 Thanks
    Percy1983
    THis is what people don't understand, if I go to the bank and ask for £5k, there is on application and I will only get it if they are confident I will pay in it back, 5 years later they have it all back + interest in most cases.

    PDLs, one application and the same time to lend £100, they have a 60% chance of getting it back + interest.

    Likewise those who aren't a massive financial risk are more likely to get accepted for a credit card, leaving those who don't (the higher risks) to PDLs.

    I really don't see they problem, they offer a service which is upfront about costs, if people choose to accept that service so be it.
    Have my first business premises (+4th business) 01/11/2017
    Quit day job to run 3 businesses 08/02/2017
    Started third business 25/06/2016
    Son born 13/09/2015
    Started a second business 03/08/2013
    Officially the owner of my own business since 13/01/2012
    • iolanthe07
    • By iolanthe07 25th Jul 13, 2:35 PM
    • 5,200 Posts
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    iolanthe07
    I think you've all misunderstood what is proposed. The Church's involvement will not be direct lending as such, but will be in such things as offering facilities and premises rent free to Credit Unions.

    The church makes enough money by not paying taxes, until they pay property tax

    The church receives no tax breaks beyond those available to any other charity. If churches had to pay property taxes on their 16,000 church buildings, then of course they would be bankrupt within days. They do pay full council tax on Vicarages.
    I used to think that good grammar is important, but now I know that good wine is importanter.
    • dealer wins
    • By dealer wins 25th Jul 13, 2:45 PM
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    dealer wins
    Default and not only will we ruin your life, we will also ruin your afterlife!!
    • antrobus
    • By antrobus 25th Jul 13, 2:49 PM
    • 16,722 Posts
    • 23,659 Thanks
    antrobus
    Welby is a cleric, yes, but he has an army of volunteers to work this through at the grassroots level.

    Volunteers who give a damn about the poverty some people are living in and would welcome the opportunity to get involved in their lives and help find long term solutions to the short term loan problem by helping out with budgetting and the like.

    Can see CAP taking this on as part of their services.

    Wonga solve the immediate problem. Welby and gang give a damn about the long term.
    Originally posted by bylromarha
    Yesss...

    This post summarises the problem with credit unions. Too many people see them as some kind of charitable endeavour, which is why there is a regular stream of bankrupt credit unions. A credit union is a business first and foremost, and has to be run as one.

    ...The church is one of the richest establishments in the country. ..
    Originally posted by GhIFA
    Odd. The latest figures I could find (2010) showed the COE running at a loss.

    It is interesting as it is unfair competition if a charity is allowed to make a loss to offer the same service. ..
    Originally posted by Percy1983
    If they make losses they won't last very long.
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