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Church's credit union set for July launch

24 January 2014


On the spot: Hector Sants, then CEO of the Financial Services Authority, arrives for a meeting with Occupy London campaigners, at St Ethelburgha's Centre, central London, in December 2011 

On the spot: Hector Sants, then CEO of the Financial Services Authority, arrives for a meeting with Occupy London campaigners, at St Ethelburg...

SIX months after the Archbishop of Canterbury announced that he wanted to "compete Wonga out of existence", the Church of England's plans to boost credit unions are taking shape.

On Thursday of last week, a former head of the Financial Services Authority (FSA), Sir Hector Sants, was named as the chairman of the Archbishop's task group on credit unions and the financial sector.

Meanwhile, research by the Church Urban Fund (CUF) released this week suggested that the Church's vocal backing for credit unions was having an impact in congregations. The survey, conducted in November and December last year, found that churchgoers were twice as likely as others to support credit unions.

Sir Hector, who was previously the chief executive of the FSA and then Barclays' head of compliance and regulatory affairs, has accepted an invitation from Archbishop Welby to chair his committee, tasked with developing the Church's support for credit unions.

The group also includes the Bishop of Stepney, the Rt Revd Adrian Newman, who worked as an economist before joining the clergy. Representatives from the credit union industry and banking sector are also on the panel.

The leader of the credit-union initiative is the Church's Director of Mission and Public Affairs, the Revd Dr Malcolm Brown. He said on Monday that much of the groundwork had been put in place since Archbishop Welby hit the headlines last year (News, 26 July).

"One of our aims was to get the Churches' Mutual Credit Union off the ground," he said. "We have drawn in some more capital and joined with the Church of Scotland. We are looking to launch it at General Synod in July."

Dr Brown said that a large part of the challenge was to convince churchgoers that credit unions were not just charity for poor people, but something that the well-off should also become involved in. "We are trying to get the conversations going about what is possible," he said.

"A lot of these conversations have begun, but turning them into facts on the ground? I wouldn't expect that at this stage. Justin Welby has been talking about a ten-year plan."

The national debate sparked by the Church's support of credit unions was a vital first step in ex- panding community finance, Dr Brown said. "There are parts of the country where you cannot physically get to a bank or a free ATM," he said.

"Credit unions have a tremendous role in those areas. But the paradox is that the best way to help the hard-pressed poor areas is to get buy-in across the social classes. It's only by becoming normal that we will get the credit unions which can reach those areas where the banks have walked away."

Dr Brown said that, because of the culture of volunteering in the C of E, asking parishioners to back credit unions was "pushing at an open door". "A lot of credit unions have volunteers already working with them who are also members of their church. We want to expand on that existing linkage," he said.

The CUF research found that almost half of those surveyed - which included non-Christians - backed the idea of churches raising awareness of credit unions and allowing them to use church premises. The survey also suggested that four in five people believed that payday lenders exploited those who did not have access to cheaper forms of credit.

More and more people are reported to be struggling with personal debt. The charity Christians Against Poverty, which runs 239 debt-counselling centres in churches around the UK, said that more people contacted them in the first week of 2014 than ever before in a single week.

Another strand of Archbishop Welby's vision was to push the broader financial sector towards supporting community finance initiatives, such as credit unions. Dr Brown said that the appointment of Sir Hector would help progress this.

"The task group is going to capitalise on the Church's moral authority," he said. "The Archbishop is . . . not coming from within the sector but he can help mobilise the resources of the sector."

Dr Brown also said that Sir Hector was one of hundreds of people from the financial industry who had contacted the Church to offer their support in promoting sustainable finance.

Archbishop Welby's intervention last year was undermined by the revelation that the Church Commissioners had invested in Accel Partners, a private-equity firm that helped to launch the payday lender Wonga (News, 26 July). In a statement, the Church Commissioners Assets Committee said that they were still investigating how to dispose of its stake.

"Due to the challenges involved, the timing of this disposal is uncertain and may take place some time in the future," the statement said. "The shares in Wonga are held in a venture capital fund. We cannot sell the shares without having to sell the majority of our total venture capital exposure, which is difficult because of the long-term nature of venture capital investment."

The committee said that they needed to have more flexibility in removing particular investments from their portfolio in the future. They said that they were conducting a review to ensure that the Church's National Investing Bodies "adhere to the highest ethical standards in selecting and managing assets".

NEW research has found that while churchgoers largely back the Church of England's support for credit unions, the vast majority are neither members of one nor intend to join one.

A study by the Church Urban Fund (CUF) - Money Speaks Louder Than Words - which was released on Tuesday, found that of the 385 churchgoers surveyed, only five per cent were a member of a credit union. But churchgoers - of all denominations - were twice as likely as non-Christians to be a member.

Although nine in ten churchgoers had heard of credit unions, only 22 per cent felt that they knew much about their workings. One of the main recommendations of the CUF report was for a renewed effort to communicate the benefits and need for credit unions, especially to those on middle or higher incomes.

Many of the Christians surveyed said that they had not joined a credit union because they did not see any need to do so. Some 44 per cent of those who attend church at least once a month said that they had no need to use a credit union, and only 25 per cent said that they would even consider the idea.

The authors of the study, which drawing on evidence from a number of focus groups which followed the survey, suggested that this was because most believed credit unions were only for the very poor.

The report also says, however, that almost half of churchgoers agreed that churches should raise awareness of credit unions, allow them to use their premises, and encourage their congregations to volunteer. One participant was quoted in the report saying: "I'd also love to just say how excited I was when I heard what the Archbishop said, because I thought that is brilliant."

Credit unions as an ethical alternative to mainstream banks also seemed to appeal to most Christians, the CUF report found.



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