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Church of England to take on payday lenders

The Archbishop of Canterbury Justin Welby said the Church was "putting our money where our mouth is."

Story highlights

  • The Archbishop has previously declared payday lenders like Wonga as "morally wrong"
  • Archbishop Welby has supported a cap on the total amount an individual can owe to any one loans company
  • Welby said he was embarking on a "decade-long process" to make credit unions more engaged with communites

The Archbishop of Canterbury plans to take on payday lenders such as Wonga by allowing credit unions to set up shop on church property.

Justin Welby, who also sat on the Parliamentary Commission on Banking Standards, said the Church was "putting our money where our mouth is" in helping develop an alternative to the high interest lenders for those on low incomes.

Archbishop Welby told the magazine Total Politics that he had already met Errol Damelin, founder and chief executive of Wonga.

"I said to him quite bluntly we're not in the business of trying to legislate you out of existence, we're trying to compete you out of existence," the Archbishop said. "He's a businessman, he took that well."

The Archbishop has previously declared the lenders as "morally wrong", comparing the industry, which has grown rapidly from being worth about £900m to £2.2bn in the past three years, to Old Testament usurers.

But this is the first time he has laid out plans to help 500 financial co-operatives, which already provide small loans, to expand their reach by using the Church's 16,000 premises.

    He said he was embarking on a "decade-long process" to make credit unions both more engaged in their communities and "much more professional". He has already launched a new credit union for clergy and church staff at the General Synod in York earlier this month.

    Damelin said he always welcomed "fresh approaches" that gave people a "fuller set of alternatives to solve their financial challenges".

    "The Archbishop is clearly an exceptional individual and someone who understands the power of innovation," he said.

    Archbishop Welby has previously supported a cap on the total amount an individual can owe to any one loans company, a proposal supported by the Labour party but so far rejected by ministers.

    Short-term lenders have faced criticism from all the main political parties and are being probed by the Competition Commission after the Office of Fair Trading found serious problems in the way the industry markets its loans.