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

Former_MSE_Helen · 25 July 2013 at 10:58AM

"The Archbishop of Canterbury has told Wonga the Church of England wants to 'compete' it out of existence..."

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Church in bid to 'compete' Wonga out of existence

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antrobus · 25 July 2013 at 11:14AM

"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 · 25 July 2013 at 11:19AM

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 · 25 July 2013 at 11:37AM

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.

mjm3346 · 25 July 2013 at 11:41AM

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 · 25 July 2013 at 11:47AM

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.

JimmyTheWig · 25 July 2013 at 11:51AM

antrobus wrote: »

"credit unions make a loss on loans of less than £1,000 owing to the administration costs involved, says think tank Civitas".

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

ChopperST wrote: »

losing money hand over fist.

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 · 25 July 2013 at 11:56AM

bylromarha wrote: »

Volunteers who give a damn about the poverty

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).

whitewing · 25 July 2013 at 12:01PM

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.

bylromarha · 25 July 2013 at 12:08PM

GhIFA wrote: »

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.

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.

Pincher · 25 July 2013 at 1:23PM

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.

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

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