The Archbishop of Canterbury has told Wonga the Church of England wants to “compete” it out of existence as part of its plans to expand credit unions as an alternative to payday lenders.
The Most Rev Justin Welby said he had delivered the message to Errol Damelin, chief executive of Wonga, one of Britain’s best-known payday lenders and sponsor of Blackpool FC, during a “very good conversation.”
In response to the proposal, Canon Andrew Sage, of St Stephen’s On-The-Cliffs Church, on Holmfield Road, North Shore, said: “I do think that the huge companies that charge such an extortionate rate are trapping people in debt.”
The Archbishop’s remarks come after he launched a new credit union for clergy and church staff earlier this month at the General Synod in York. Mr Welby, who has served on the Parliamentary Banking Standards Commission, has said he plans to expand the reach of credit unions as part of a long-term campaign to boost competition in the banking sector.
There are also plans to encourage church members with relevant skills to volunteer at credit unions.
Small, local lenders could also be invited to use church buildings and other community locations with the help of church members. The Government announced an investment of £38m in credit unions in April to help them offer an alternative option to payday lenders. The entire pay day lending industry, worth £2bn, was referred last month for a full-blown investigation by the Competition Commission after the trading watchdog uncovered “deep-rooted” problems with the industry.
Wonga said in March that it welcomed any attempt to encourage responsible lending and that it has been “instrumental” in helping to raise industry standards.
Mr Damelin, founder of Wonga, said: “On the competition point, we always welcome fresh approaches that give people a fuller set of alternatives to solve their financial challenges.
“I’m all for better consumer choice.”