I pray the Archbishop’s laudable but blundering entrance into the payday loan debate doesn’t hurt more than it helps.
The trip-up of the Church’s own investments is a side show – my concern is far more about his original soundbite:
We’re not in the business of trying to legislate you (Wonga) out of existence, we’re trying to compete you out."
Wonga and other 6,000% APR loans are the crack-cocaine of the money-lending world – recent studies even suggest some people are now payday loan addicts.
Lenders use instant apps and fast clicks to target the impulses of the "must have it now" generation. Loans are processed at lightning speed, quick enough for some to apply and receive while drunk.
And while I’m a fan of credit unions and cheer Bishop Welby inviting them into churches, that’s unlikely to scratch this 21st century problem’s surface. Many payday loan customers are as likely to visit a church as the Archbishop is to win Olympic gymnastics gold.
These loans are about speed and ease. The Church rightly won’t lend to those who can’t afford to repay, many payday firms will.
As one of the few places where there’s not been a crackdown, the UK’s a crock of gold for payday lenders. That’s why they fill our high streets.
So Archbishop, plaudits for trying to compete, but where I strongly oppose you is that your much-publicised soundbite looks like you’re saying there is no need for market intervention (you may not be, but that’s the impression).
We do need tight controls on this industry. Competition from the Church is not enough. Costs should be capped, ads banned from kids’ TV, the application process slowed, and mandatory credit checks enforced (see Payday Loan Changes Needed).
Those of us who’ve campaigned on this for years have recently built up pressure on a government reticent about acting – and I worry your much reported intervention risks letting politicians off the hook.
Related guides and blogs:
- Best buy payday loans?
- Universal credit’ll push some to payday loans
- Self-regulation harder than planned
- The bank deal that dwarfs payday loan costs
- Payday loans: why we need regulation now
- £100 at 5,000% APR costs $14tn after 7 years