WHEN the Archbishop of Canterbury declared his “war on Wonga” in 2015, I punched the air with joy. It was so good to hear him, and the Church, stand up against such a pernicious evil. It is with some relief that we have seen payday lenders retreat into the sunset. But it is too early to declare the problem over: you cut off one source of exploitative credit, and others appear.
What the nation’s existential crisis has revealed is how low our resilience is to financial disaster. We used to say, rather glibly, that any of us could find ourselves destitute if we simply missed three pay packets; but this financial disaster is unfolding before our eyes, and none of us is immune — not even the clergy and those who work under the umbrella of the Church, in church schools, organisations and charities.
Churches Mutual, a credit union aimed at these groups, was launched in 2015. Today, it has 1300 members, and, after five years, has granted just under £7 million in loans.
But there are some real challenges in helping the Church to play a part in freeing people from bad lending and to be part of the solution as well. One of the problems is perception: credit unions are seen as lenders of last resort, as a sub-prime lender to those who are cashless and jobless. This can put off people who, although not right on the buffers, might be heading that way. Moreover, how do we put across clearly what credit unions are, and how you people can be part of them — both lending to, and borrowing from? Matters financial can seem complicated. When debt comes, the first instinct may be to close your eyes and hope that it all goes away.
THE first credit union opened in 1964. These days, more than 1.2 million people in Great Britain have received loans from them. They are one of those tiny good-news stories that could do with being exposed more generally to the light.
But it is when you hear the stories of the ways in which credit unions have worked with people that you understand how subtle any approach to poverty needs to be.
If you dig behind the figures, it becomes clear that each loan has a very personal edge. The credit union has helped all sorts, in all sorts of situations, including helping a parent to pay for a child’s university education when the whole family was strapped for cash. But just giving a loan, in itself, may leave the causes of the debt untreated: Churches Mutual managed to sort out a loan and credit card consolidation package for the parent.
On another occasion, the credit union organised a small loan so that an exhausted family could take a holiday. That’s the kind of thing that many of us are going to need once this crisis is over. It is interesting that credit unions are not just about emergency debt, but also about quality of life and human kindness — not something that is often associated with financial institutions.
WHAT might the future hold for credit unions, especially this church one? Undoubtedly, the post-coronavirus world will present challenges to many people’s personal finances. Mortgage holidays and interest rebates are welcome as a stop-gap solution, but they do nothing to address the lack of financial resilience in the wider community. And what happens when these initiatives come to an end?
If the pandemic has taught us anything, it is that no one is an island. The Churches, as significant employers in the educational, charitable, and social-care sectors, often recognise that they have a duty of care to their employees, without realising that they can be proactive in helping them to build their financial resilience by promoting credit-union membership, and through facilitating access to their services, savings, and loans direct from payroll.
Banks are being ultra-cautious about giving out loans, and, when that happens, it opens the door to exploitative doorstep lenders — or, worse, loan sharks. In the months to come, credit unions are likely to be a point of hope and practical help, but only if people know about them.
The war on credit sharks goes on. Being in debt is devastating, and can ruin physical and mental health. I sense that, for the church credit union, the battle to be heard, to explain itself, and to be a part of rebuilding this country, one bank account at a time, has only just started.
I grew up in a family who knew what it was like to have no money. My father lost his job and became ill, and we were in a terrible hole. Thankfully, family friends and relatives helped us when we needed it — lending Dad a car so that he could go out and work as a carpet-fitter. It was a miserable time, and it could have gone either way for our family. If there had been a church credit union around at the time, we would have been eternally grateful.
The Revd Steve Morris is the Vicar of St Cuthbert’s, North Wembley, in the diocese of London.