19.09.2013
By Malcolm Brown – Director of Mission and Public Affairs for the Church of England
Archbishop Justin Welby hit the headlines with his desire to see pay day lenders like Wonga “competed rather than regulated” out of business and his support for the Credit Union movement as part of a strategy for this. It is worth examining the Archbishop’s approach and what the church is doing to put his ideas into practice.
Soon after becoming Bishop of Durham, Justin Welby joined the Parliamentary Commission on Banking Standards, continuing this commitment after his move to Canterbury. Already well aware of how finance works from his earlier career, the Commission gave him a clear insight into how things went wrong in 2008. He saw how lack of competition in the finance sector led to market failure – so part of the solution must be to create a functional financial market by generating much greater competition.
His experience as a priest in Durham, Liverpool and Coventry had showed him how poorly the banks served the people, especially in hard pressed communities. Pay day lenders boast of their ability to make instant loans, but they do so at the cost of extortionate interest rates for customers. Not everyone who turns to the pay day lenders needs an instant loan – but in many places there are few choices. Again, enhanced competition – more choice at local level – may be the key.
The credit union movement is well established, has tremendous potential coverage, but sometimes lacks a public profile. Credit Unions are too often seen as “anti-poverty strategies” rather than as opportunities which can serve all sorts of people well. They can also, we were told, lack suitably experienced people to run them and sometimes need more physical outlets so that more of the people embraced by the Common Bond can actually make good use of what is offered.
To increase awareness and buy-in, we are developing our own Credit Union for clergy and church staff, working in partnership with the Church of Scotland. When this is launched next July, it will gradual create a cadre of church workers who benefit from, and can therefore be more effective advocates for, Credit Unions.
And we asked, what has the church got that might serve the Credit Union movement? We have people, often with useful skills, and a culture of volunteering. We also have a portfolio of premises – literally from Lands End to John O’Groats – in almost every community. Could these be brought together to serve local credit unions?
We were just beginning discussions with ABCUL and other potential partners when the media got hold of the Archbishop’s comments on Wonga. We were inundated with public support, but this means the church has to deliver…
We are pressing ahead with the plans outlined above. But we haven’t forgotten the Archbishop’s initial analysis of the problems with the finance sector. We aren’t claiming that our support for Credit Unions is the whole answer or that the church alone can abolish pay day lenders. But we shall be using our resources and contacts to argue for a more competitive sector, especially a more robust and flourishing Credit Union movement. And we hope that our practical engagement at grass roots level will enable the church to speak with some authority about the kind of financial services sector the country needs.