THE Church of England should retain its investment in the payday
lender Wonga, in the hope of improving the company's moral
standing, a review by the Church's Ethical Investment Advisory
Group (EAIG) suggests.
The group's chairman, James Featherby, said: "In our view, it is
better to stay on the field of play than to sit on the
The annual report refers to the Archbishop of Canterbury's
threat to "compete Wonga out of business", not knowing that the
Church Commissioners' £6-billion investment portfolio included
shares in the firm, thoughtto be worth between £75,000 and £100,000
The review findings caused consternation in some quarters, where
it was felt that the Church should not be involved with an
organisation which last week had to apologise and pay out £2.6
million compensation for sending out bogus legal letters to 45,000
debtors. The City of London Police are still considering whether to
launch a criminal investigation.
The Vicar of St Matthew's, Elburton, in Plymouth, Prebendary Rod
Thomas, who chairs the Evangelical group Reform, told the Daily
Mail: "I do not think the Church Commissioners have set out to
do anything other than act in the best interests of the Church, but
once the facts are presented to them, it is up to the Commissioners
to do something about it."
The chief executive of Christian Concern, Andrea Minichiello
Williams, said: "The job of the Church is to tell the truth, and it
should not be doing things that do a disservice to that task."
The review pointed out that the Wonga holding was part of a
"pooled fund" directed by a third party, which meant that other
investments would have to be sold if Wonga was dropped. That could
cost the Commissioners anything between £3 million and £9
The National Institutions, said Edward Mason, the EIAG
Secretary, "have no direct investments in high-cost lenders.
Investment restrictions in this area were first proposed by the
EIAG in 2001 when the EIAG advised against investing in doorstep
He pointed out that, as early as 2011, the EIAG had advised the
national church institutions to avoid payday lenders and all other
forms of high-cost credit. "This policy was so far ahead of what
any other ethical investors were doing that the research company
the EIAG used to identify companies breaching the Church's ethical
investment policies had never been asked to identify high-cost
lending companies for investment exclusion before."
Mr Featherby hinted that the Church would not retain the
investment in the long term, and said that it would be treated
according to the parable of the weeds in St Matthew's Gospel, which
were allowed to grow with the wheat until harvest, and then
separated out and burned.
He said that the controversy had "highlighted some
misconceptions about ethical investment, and, in particular, that
its objective is to achieve a morally perfect portfolio.
"It is no more realistic to desire that they invest only in
morally perfect companies than it is to desire that any of us
should relate only to morally perfect individuals. In any event,
such an objective would rather miss the point of the gospel. It is
not the healthy who need a doctor, but the sick. . .
"When engaging with companies, the investing bodies seek
positive momentum, not perfection. We usually only recommend
divestment where we see no genuine desire for change."
He concluded: "Difficult choices remain, and it is inevitable
that the investing bodies will, from time to time, graze their
knees as they interact with a complex and ambiguous business
The review also decided to reduce its ethical-investment
thresholds, shunning businesses with more than ten per cent of
their business in tobacco, gambling, high-interest-rate lending, or
human embryonic cloning, instead of the present 25 per cent.
The Association of British Credit Unions, which had previously
welcomed Archbishop Welby's stand on Wonga, declined to comment on
A spokesman said that it did not have "enough of an
understanding of the C of E's investment policies and their
practicalities to make an informed comment".
Welby warns of rising menace of loan sharks
THE poor are in danger of being forced into the hands of
loan sharks because of the decline of payday lenders, the
Archbishop of Canterbury has warned, writes Tim
Speaking to the New City Agenda think tank in the House
of Lords on 17 June, Archbishop Welby said that the payday lending
market was declining, but credit unions were not yet well
established as a source of low-cost loans.
"Of course I am concerned . . . that if you knock payday
lenders on the head before there is a viable alternative, in many
parts of the country the only place people can go is loan sharks,"
While payday lenders charged "usurious" rates of
interest, theydid not "send people round with baseball bats",
Archbishop Welby said.
Ever since he pledged to compete the payday lender Wonga
out of business last year, Archbishop Welby has been championing
credit unions as an alternative. He admitted, however, that it
could be a decade before they were a viable option for
Archbishop Welby, who was a member of the Banking
Standards Commission, told the audience that the culture of banking
had become "contaminated" by the time of the financial crisis in
Even though he was convinced of the desire to change by
many chief executives, he said that reinventing the culture of
banking would take a very long time, and was not something that
could simply be changed by making new laws.
Instead, he urged the financial industry to adopt
values-based banking - not just seeking the best interests of those
in the system, but the "common good" of the whole nation, even
those not contributing to the economy. Quoting Pope Francis, he
told the audience: "Money must serve, not rule."
His remarks came shortly before a report by the City
regulator, the Financial Conduct Authority (FCA), revealed that
Wonga had threatened some customers with letters from fake law
Some people who were in arrears on their loans were sent
letters threatening legal action from law firms called Chainey,
D'Amato & Shannon, and Barker and Lowe Legal Recoveries.
Neither firm actually exists.
The FCA has told Wonga to spend £2.5 million
compensating up to 45,000 customers who were affected by the