Welby’s ‘war on Wonga’ credited with turning tide on payday lending

12 February 2016

“Sea change”: Archbishop Welby has thanked Sir Hector Sants (right), who chaired his task group on responsible credit and savings

“Sea change”: Archbishop Welby has thanked Sir Hector Sants (right), who chaired his task group on responsible credit and savings

THE Archbishop of Canterbury’s so-called “war on Wonga” has helped bring about a “sea change” on payday lending, the man appointed by Archbishop Welby to lead the reforms has said.

Sir Hector Sants, a former banking executive and head of the financial-services regulator who chaired the Archbishop’s task group on responsible credit and savings, said on Monday that high-cost credit was now completely different, two-and-a-half years after the Archbishop first criticised payday lenders (News, 26 July 2013).

“The Archbishop of Canterbury’s initiative has boosted support for credit unions from the Church and wider society and helped contribute to a sea change in public and political opinion,” he said.

Sir Hector’s comment came as he launched the final report of his task group. The report suggests that the “worst excesses” of the industry, such as sky-high interest rates and continually rolling over debt until it becomes unmanageable, had been tackled by tougher government regulation.

“The remaining operators are having to reconsider their business model and how they can lend more responsibly in this new environment,” the report concludes.

Although many other people played a part, Archbishop Welby’s promotion of credit unions as an ethical alternative to payday lending is highlighted in the report as vital in changing views.

The report states: “The Archbishop’s comments on Wonga helped change public opinion, making way for tighter regulation of payday lenders. Subsequent speeches and interviews by him and Hector Sants have highlighted the need for more responsible alternatives.”

Archbishop Welby thanked Sir Hector and the task group for helping to strengthen the community-finance sector. “The task group has delivered an impressive list of achievements that will have a real impact now and in the future.

“I would also like to pay tribute to the energy, enthusiasm, and creativity of the Church of England parishes and schools in helping make this vision a reality,” he said.

The task group’s report shows that payday lending has fallen by 68 per cent since its peak in 2013. In addition, the charity Citizens Advice reported a 53-per-cent fall in the number of people with payday-loan problems whom they advised between April and June 2015 compared with the previous year.

Meanwhile, membership of credit unions has been steadily growing: it is up by 13 per cent since July 2013.

Among the initiatives of the task group is the Churches’ Mutual Credit Union (CMCU), set up with the Church of Scotland, the Church in Wales, the Methodist Church, and the Scottish Episcopal Church.

For ministers and church employees, the CMCU now has 600 members and assets worth £1.4 million, 12 months after it launched (News, 20 February).

Thirty-one dioceses have also begun supporting local credit unions, and 45 bishops have joined one themselves, the report says. A new network of “credit champions” has been launched in the dioceses of London, Southwark, and Liverpool, and is to bring in 3000 new credit-union members by the end of the year.

Case studies in the report show how the C of E has embraced the ethical-finance agenda.

At All Saints’, Murston, in Kent, a new access point was opened for a local credit union inside the church (News, 17 October 2014). This has led to 800 new accounts and doubled the union’s balances to £1 million.

In the diocese of Lichfield, Midcounties Cooperative Funeral Service and Walsave credit union have created an affordable funeral loan scheme that can be administered by clergy; other dioceses are now trying to replicate this.

The LifeSavers programme of financial education and savings clubs in primary schools has been introduced to 150 schools; and funding has been secured to bring it to another 150 schools over the next three years. In total, 40,000 children will take part.

A survey last year found that 71 per cent of C of E clergy knew what credit unions were and how they worked; and 79 per cent agreed that “helping people to manage their money wisely is an important part of the Church’s mission”.

Sir Hector said that he was shocked at how quickly ethical finance had become embedded in the Church. The “enthusiasm and support” from the C of E had “truly surprised” him.

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