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Morgan backs credit unions

13 September 2013

THE Archbishop of Wales, Dr Barry Morgan, has lent his support to calls by the Archbishop of Canterbury for churches to support credit unions as a way of defeating payday lenders such as Wonga (News, 26 July).

Addressing members of the Church in Wales Governing Body in Lampeter on Wednesday, Dr Morgan said that television advertisements make payday loans "sound enormously attractive", but he warned that "the interest rates . . . are horrendous, over 5000 per cent."

He accused payday-loan companies of targeting those who could not afford to repay the money, knowing that many borrowers "will default on other creditors".

"One million pounds in payday loans will be made available to Blaenau Gwent - one of the poorest parts of the country - in the next year. . . The fact is, of course, that people are often desperate for the basic necessities of life since wages are not increasing, whilst the cost of everything increases."

Credit unions provided an alternative way "to lend to people at a reasonable interest rate", but were "seen as something that exists for poor people", Dr Morgan said. He urged all churchgoers to pay £10 or £20 a month into credit unions to "remove the image of them being poor people's banks".

"This would not be a gift on our part. We would get a half-per-cent return on our investment, which is far more than you get in the current accounts of most banks at the present time. More importantly, money could be lent at reasonable interest rates, to people who desperately need it."

Dr Morgan did not mention Wonga by name. He confirmed that the Church had "no direct holdings in companies engaged in doorstep lending, payday loans, or pawn broking", and that "checks were being made with managers of third-party funds in which we have holdings to see if the same applies."

There could be no "absolute certainty that there are no links via third parties", Dr Morgan said. "Our position is, and our fund managers are advised, that we would never knowingly invest in them." He said that the Church's Ethical Investment Committee would discuss the issue next month.

He called for public debates about economic justice, including whether it was right that the chief executives of large companies "now earn 280 times" the salary of their lowest paid employee.

Full reports from this week's meeting of the CiW Governing Body will appear in next week's Church Times.


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