Still from a Wonga.com television advert
Payday Loans companies like Wonga.com may be some of the fastest growing companies in the UK, but many blame them for preying on the vulnerable and the poor with interest rates of over 1000% APR. Now Archbishop of Canterbury Justin Welby has said that he intends to “compete” such companies out of business with a plan to expand credit unions as a viable alternative to the lenders.
Welby told Total Politics magazine
“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.”
This move comes after the Church of England launched a new credit union for the clergy and church staff earlier this month at the general Synod in York. There are plans to invite small, local credit unions to use church buildings and other community locations to expand their businesses, with church members with relevant skills encouraged to volunteer.
The support from the Church follows a government investment of £38 million in credit unions announced in April to help them modernise and compete with the internet-first payday lenders like Wonga.com.
The Competition Commission has also recently launched a full-scale investigation into the lending industry, after the £2 billion industry was found by the Office of Fair Trading (OFT) to have “deep-rooted problems” which distort the marketplace.
There are currently one million credit union members in the UK, with eight million payday loans taken out each year.
