Payday loans

Let’s move on, shall we?

I wrote this a week or so ago, then pushed it to one side and was going to forget about it, but I still think it’s a good topic and am interested in your thoughts.

The Archbishop of Canterbury, Justin Welby, having previously launched a new credit union offering short-term, low-interest loans to clergy and church staff, recently revealed his intention for the Church of England to force a controversial payday lender out of business by allowing emerging not-for-profit credit unions to use church buildings, manned by church volunteers, so as to expand their reach to more customers. There are around 500 credit unions in the UK, with almost a million customers, but there are many, many more churches.

By the way, just two per cent of people in the UK are members of a credit union, compared to 24 per cent in Australia, 44 per cent in the USA and 75 per cent in Ireland.

A financial co-operative lending money at comparatively low rates obviously being a much wiser alternative to those in financial difficulty who are considered by the banks to be unsuitable people to lend money to, even the banks that we practically own since bailing them out, than a wealthy organisation that makes profits of £50 million a year by charging eye-watering rates of as much as 5,000 per cent APR to those who can least afford to repay. Predatory lending at its worst.

The payday lending industry is worth £2 billion.

He warned the boss of Wonga: “We’re not in the business of trying to legislate you out of existence; we’re trying to compete you out of existence.”

I know. It’s not the Church’s place to legislate. The Government, if it wanted to create a fairer and more equal society and halt the continued exploitation of the poor and most vulnerable, could do all the legislating it liked and the majority of people would welcome a display of courage and decency at long last. There is no cap on these interest rates in the UK, unlike France, Germany, Poland, Japan and some US states (yet there is now a cap on benefits, which tells you all you need to know about those running the UK). Thirteen US states have banned payday lending outright.

The Church wouldn’t be doing the lending, the credit unions would, so there’s no financial risk to the Church whatsoever. And its premises are usually half-empty anyway so it would be nice to see them being put to good use before anyone suggested bulldozing them and replacing them with flats to help ease our housing crisis – a much better use of space, surely. So, what’s the worst that could happen?

Pretty much the worst that could happen happened, barely 48 hours later, when it emerged that the Church, via its pension fund, had a £75,000 stake in US venture capital firm Accel Partners, which had helped to establish Wonga in the UK in the first place back in 2009.

Feel free to take the Lord’s name in vain at this point.

The Church of England has an investment portfolio worth £7.5 billion, including shares in a host of less than holy enterprises. There’s Google, with all its child pornography; Apple, with its disgraceful factory conditions and labour abuses; Shell, with its Arctic drilling (a disaster waiting to happen); BP, which has already caused its share of environmental damage; GlaxoSmithKline, with its continued ‘need’ for vivisection (and most recent stink: bribery of doctors); Vodafone, with its tax avoidance; Nestle, subject to an international boycott since 1977, for God’s sake (for its part in the baby-milk scandal); and everybody’s favourite blot on the landscape, Tesco (for everything from squeezing out independent traders to prospering from the UK Government’s Workfare/get-the-unemployed-to-work-for-free-for-big-companies-that-donate-money-to-us scheme; for selling live turtles in China to employing staff on zero-hours contracts, and on and on the list goes). All such sound ethical choices, you can plainly see. Praise be.

The Church’s investment portfolio is not directly controlled by the Archbishop, but managed by thirty-odd Church Commissioners. Their official policy on ethical investing is that “the Commissioners do not invest in arms or pornography or in any company whose main business is in gambling, alcohol, tobacco, or home credit provision”. Get this. Their rules state that they can invest in firms who make up to 25 per cent of their money through payday lending or gambling (such as doorstep lenders and pawnbrokers), up to 10 per cent through arms dealing (with zero tolerance of companies dealing in either nuclear and chemical weapons or mines) or up to three per cent from pornography.

Good Lord, 25 per cent! That’s a considerable chunk. I’d have thought half that amount would be the absolute maximum allowed. Talk about helping the sinners sin.

The Archbishop gave his embarrassment a rating of eight out of ten.

Wonga has also been in the newspapers recently, albeit the back pages, because Senegalese footballer Papiss Cisse, who plays for Newcastle United and is a practising Muslim, had refused on religious grounds to wear the club’s new shirt following a club sponsorship deal with Wonga, worth around £8 million a year, which would mean the obligatory emblazoning of the payday lender’s logo across the players’ chests.

He has now agreed to wear the shirt after consulting with his Islamic teachers, or being given more money, or something, so let’s hear no more of silly footballers earning twice as much in a single week as the average man does in a year standing up for what they believe in. God forbid we might start thinking they are capable of deep thoughts and convictions, as well as kicking a ball around.

Wonga’s defence, naturally, is that they are meeting a need and if they were not allowed to continue to exploit the vulnerable by lending unsustainable debt, those poor wretches would have no choice but to borrow money from scary people who might well break their legs and stub out cigarettes on their cheeks if they couldn’t pay up on time. A defence I’m about as sick of hearing as that of bankers leaving the country if they were forced to pay more tax and had their obscene bonuses taken away from them. Wah wah. Just go already. Nobody cares. We’d throw a big party and happily wave you off.

(In the interests of fairness, and if you like pie charts, have a look at these facts and figures from the Consumer Finance Association, the trade association representing the interests of the UK’s short-term lenders. They maintain that caps on interest rates have detrimental consequences on consumers. But they would say that, wouldn’t they?)

The other thing they bleat on about is that, yes, they do indeed charge high rates but only on short-term loans, so 5,853 per cent APR looks and sounds a lot worse than it really is because the loan was never meant to last a year, just until payday. But 28 per cent of payday loans are rolled over beyond their payback date at least once, and half their revenue comes from such refinanced debts, as they very well know.

The Church of England, you’ll be relieved but probably not surprised to learn, has called for an investigation into its own pension fund.

Thank Christ for that. An investigation!

Oh, the hypocrisy.

Yet I don’t know about you, but I find it refreshing that the Church is speaking out on issues relevant to modern society’s current crises rather than just banging on about gay marriage and women bishops, which actually wouldn’t register on that many people’s scales of concerns at the best of times and are not nearly as important as pondering how many boiled sweets they can fit in their mouths without choking. There is certainly some distance between these and much more pressing burdens such as, I don’t know, how they’re going to pay the rent this month now that they’ve filled the car with petrol. The Archbishop of York, John Sentamu, recently spoke out against low pay. Amen to that.

Whilst I know all too well that religion in general is used to justify wars, demands subservience, opposes rational thought, discriminates against women, and (why not?) is responsible for the horrors of HIV and back-street abortions (well, it is), it would be nice if the Church really did have the poor in mind for a change. Besides, before TV, newspapers and Twitter, the Church was the medium through which the public sought moral guidance and gossip in equal measure. The Church ought to be a national moral arbiter.

It doesn’t matter whether you’re a believer or a churchgoer, I know that I’d like to live in a society where right and wrong are more clearly defined, one that rewards humanity rather than the greediest few. And I’d much rather empty churches be turned into community banks rather than yet more Indian restaurants.

The poor should have every opportunity to exercise their potential to act collectively. Of course, credit unions also encourage saving and typically will only lend you money if you have shown yourself to be capable of saving regularly. This can only be a good thing for society as a whole, the bonus being that they could force payday lenders to lower their rates if not pack up altogether.

Few can deny that the likes of Wonga prey on the most vulnerable, trapping them in high-interest debt from which they often cannot escape. Those on low incomes, as always, as everywhere, often end up having to pay more for everything; from their gas and electricity, should they pay by the meter, or simply refuse to allow companies unchecked access to their bank accounts to take what they’re due whenever they wish to take it. It’s not fair and should change. The Church should be saying this.

Although I’m disappointed that a senior bishop, with all he already peddles from his pulpit, couldn’t say it without reinforcing the lie that nothing in this world can function without business (ignoring all the clubs, societies, fêtes, etc. that run perfectly well, mostly run by people who have no specific training, no recognised qualifications and most importantly, no desire to profit from their actions), I’m glad he’s spoken out and hope he continues to do so.

Maybe if the Church, incompatible as it is with democracy, started seriously shaking some foundations, more people would care enough to listen. And maybe, by extension, get off their arses and vote next time.

Asked if capitalism was amoral, the Archbishop, a former oil company executive, said: “I don’t think capitalism is necessarily amoral, it can sometimes be immoral but it is not of itself immoral.”

Clearly, the corporate occupation of every corner of life continues. For all the talk, here’s another reminder that the Church is yet another business.

Author: FEd

Features Editor of David Gilmour's official blog, The Blog ('Features' previously being its rather naff title), affectionately - or lazily - shortened to 'FEd'.

32 thoughts on “Payday loans”

  1. My, my Fed! I think David should write a new song and call it “Welcome to the Obscene”. LOL.

  2. FEd, I just love it. ♥ What a wonderful crusader you are. We need more people like you in this world… and thank God you write about it. Will give more thought to this post, but had to commend you for your GUTS. 🙂

    1. Wow. Thanks, Carolyn. I appreciate that. I wasn’t going to bother posting it, to tell you the truth, as the days have rolled by and so much has happened since it was genuine ‘news’; I thought it would end up with all the others I’ve started but then tired of and forgotten about. (I wanted to keep the previous topic going, just in case anyone wished to comment on developments in the Bradley Manning case.) But it’s something I hope everyone has a view on. Surely there are better ways for the Church to spend its money. Building houses, for example.

      I am a (terrible) Christian, by the way. Probably should declare that. I don’t attend church but I know all the best hymns.

  3. Guess that’s why in the USA they put “In God We Trust” on the paper money. (Probably put that on the money the same time some in congress put God in the pledge and other items; was not always there till after WWII.). Bush wanted the churches to be the social network for USA. Glad that did not happen. Talk about a judgmental group of people.

    Whatever happened to state and church being kept separate? The line is veering away from grey to very dark…

  4. Carolyn is correct about you being a brave soul and writing about such hot topics. More people should have such open dialogue. If more people discussed the problems we face, perhaps, more solutions would come! In the USA it has become best to keep one’s thoughts guarded. The repercussion can be very damaging if not deadly. I know people that will not put bumper stickers on their vehicles for fear of retaliation. (Just a minor example.)

    “The Church” should take notes from the Salvation Army in regards to actually helping humanity and not being judgmental. Mostly churches are for profit and hide behind their “church” status for tax dodging purposes. Try going to a church poor and see how you are welcomed into the congregation. The new Pope seems to be trying to reach out to all. So that is a positive push for people.

    FEd. Since you write many excellent topics; and mentioned some fall to the wayside never to be read; do you have any publications, books etc. that one could look up and read? If not, perhaps it is your calling. You do an excellent blog with important topics. This blog is a breath of fresh air and most that respond do so with thoughtful intelligence. My input is not as well written as most of your responders. But I do enjoy being “part of”. Thank you. You and your bloggers make me feel not so alone in a world of craziness.

    1. Bless you for that.

      See? Told you I’m a Christian, blessing people all the time.

      In all serious, the blog would be nothing, and never would have been anything, without everyone’s contributions to discussions big and small, so I’m grateful for every one of them.

      I agree that the new Pope seems to be saying all the right things. Let’s hope it continues. (More condoms, please.)

  5. Whenever any entity gets too big, it ceases to do its original work well. And the Church is HUGE!! All the denominations are. So none of this hypocrisy surprises me in the least.

    So what is wrong with capitalism? It means that money matters more than anything else. And that people will do all kinds of amoral things to make money. And that all of the spoils go to very few people, specifically those few who need them the least. It does not serve the vast majority of the population. And at least here in America, this is exactly the thing we criticize most about communism. That it fails to serve the people. They like to tell us there is room at the top, but most of us spend our entire lives trying to get to the top without ever getting anywhere near it. Morality is left in the dust and few people ever realize that they have never had a chance. Because the system is built to prevent it. It does not serve the people, and it never will. And people? They get badly hurt in the process. Just visit the rougher areas in any large city and you’ll see how very badly people get hurt by the lack of opportunity, by the amorality of others.

    Whenever any entity gets too big, it ceases to do its original work well. It’s true in religions, in governments, and in political systems. The church cannot meet the religious needs of the masses, just as governments cannot meet those needs, just as the capitalist system cannot meet them. And hypocrisy? It’s the logical extension of any system that puts its own monetary interests above the pursuits of the people it proports to serve.

    1. Very well said. Reminds me of John Lennon:

      There’s room at the top, they are telling you still
      But first you must learn how to smile as you kill

      — ‘Working Class Hero’

    2. FEd, as I was writing about “room at the top” I was thinking of that song. I actually edited that sentence to sound LESS like the song.

    3. Something makes me think that probably nowadays John Lennon would have written something about “There’s room at Golgotha, any time. You don’t even need to kill anybody …Nobody but yourself…” (although Lennon had never been my hero).

  6. “This so-called new religion is nothing but a pack of weird rituals and chants designed to take away the money of fools. Now let us say the lord’s prayer 40 times, but first let’s pass the collection plate.”

    – Rev. Lovejoy

  7. Great post Fed. 🙂 When I first heard the story about The Church of England and payday loans, I thought it was a great idea. I still think so even though they have discovered they had inadvertently (?) invested in one of them. They’ve come out and said it.

    Banks, the government, buisness don’t own up to mistakes never mind “mistakes”. This is exactly why I don’t trust them.

    They all just want to make money out of the masses because every little adds up. In the case of the payday loan (sharks) lenders, just because they advertise on TV and other media, have high street shops, doesn’t make them wholesome or a good option.

    I’m also alarmed at the rise in advertiising of gambling.

    All this media exposure of these lending and gambling companies is having the effect of “normalising” the practices. A whole generation could grow up thinking living in debt is the normal way to live, that everybody does it.

    Despiite the

    Cleansing of the Temple story from the Bible *, I think it is a great idea for the the Church of England to offer it’s help. I hope the other Christian churches follow suit.

    *The devil made me think of the Prince song Theives in the Temple first I confess. :))

    Churches I have visited are more than places of worship, they have become community centres where you can mix with people who have some morality and goodness about them. There are often good social do’s. I think too many people think it isn’t “cool” to go to church but the added advantages of being part of a like minded society, out weighs ridicule. I’m a firm believer in the bonding together of a society that a church can make. Another reason I hope they get their credit unions off the ground.

    I’d like to see people, see the church with new eyes and revitalise it. You don’t have to believe in God to believe in belonging to a good society of people who’s meeting place is the church.

    I think.

    ash

  8. “. . . that the Church is yet another business.”

    I have been a church goer and user of its various services all my life. I’ve seen our parish priest go without electric or gas because he couldn’t pay the bills because he gave what money he had to the poor. None of the priests I’ve ever known had posh or even new car. Every priest I’ve ever met has been a good, kind hearted person.

    I was involved in organising a family funeral at the end of last year, the total bill came to over £6000 with £150.00 of that going to pay for the priest’s services!

    When we discovered that’s all he got paid we felt outraged and made up an envelope of a bit more, also a box of shortbread and a bottle of whisky (because we knew he liked it and wouldn’t buy himself one), we’re hoping he didn’t give them to the poor! I told him not to anyway 🙂

    I don’t think the church is like other businesses, I don’t think the priests are great con artists who spin you all the holy stories to get money out of you. They seem to me to be caring people who believe in good.

    ash

    1. Did you hear about Reverend Paul Nicolson? He’s 82, retired, and was recently summonsed for non-payment of council tax, which he’s refusing to pay until his local council restores council tax benefit for those in his community who have been left in hardship since government cuts. He also refused to pay the hated Poll Tax.

      He said: “The faith that I have is about putting the poor first. There’s no good just saying that, you have to put it into practice. So I am refusing to pay my own council tax to highlight their plight.”

      More like him, we need.

    2. I think there’s a big difference between the Church as an Institution and its ‘workers’ (the priests) that are working on the ground (sorry if it’s not the right expression, I mean ‘sur le terrain’) and therefore are closer to ‘everyone’, incuded the poor. It’s as if we made no distinction between ‘evil’ Shell and each individual who is working for the company. Just an example.

      Here, the Church (the Institution) pisses me off when it comes to its ‘involvement’ in school education, but it’s probably off topic, sorry.

    3. I hadn’t heard about his latest campaign, power to his elbow. 🙂

      About the new council tax rule that if you live in social housing and your home has an empty bedroom ie underoccupied, (and that applies to a room used for dining), then any council tax benefit will be reduced by 25%. However, there is a shortage of housing for people to “downsize” to.

      Have you noticed in the meantime, housing for sale has shot up in price? Demand is high so values are increasing.

      This must mean there is a general shortage of housing in both the rented and private sectors. House building has been in the doldrums for ages, you have to ask, what’s going on?

      The goal posts have been shifted whilst people’s hands are tied and even if they handed the keys back to their social landlord and said they couldn’t afford to live there anymore, the local council has a duty to rehouse people. WHERE? Will they house them? Out of the frying pan into the fire, no doubt.

      I can’t understand it. Did our government not see this coming? Did they engineer it for some reason? Or is this benefits reduction another cynical sticking plaster stuck on to help underfunded local councils continue to provide vital services. Where has our country’s wealth gone?

      You know you just can’t win.

      ash

  9. There’s something else that came to me about the council tax. Look at the situation where a family has lived in their rented house for many years and at their own expense carried out improvements, grown a garden, made good friends with their neighbours, got jobs in the local area, whatever, they are well established there.

    Then, something happens and they have to make a claim for council tax benefit. (If there was ANY alternative housing available.) Would they eventually be forced to seek to downsize. Change their lives entirely?

    If I recall correctly, someone tell us if I’ve got this wrong, the landlord doesn’t have to compensate the tenant (upon leaving the tenancy) for improvements he’s made to the house. Things like a conservatory, garden shed, £3000 landscaped garden, even doing it yourself, you can landscape a garden and spend that amount on it!

    You won’t have all that in the place you move to.

    It’s mad, absolutely mad. People have to find the extra money or move, there’s no where to go. Looks like the return of the Wicked Sheriff of Nottingham.

    I’m sure our leaders have become insane, they are doing and saying anything to make us believe they are doing right by us. They don’t give a flying f**k about the country and its people because they will retire abroad on a nice, fat taxpayer funded pension. Either that or I’m insane.

    Thank you for allowing me a good rant Fed. :))

    ash

  10. From “Tommy,” the original rock opera by The Who:

    If I told you what it takes
    to reach the highest high,
    You’d laugh and say ‘nothing’s that simple’
    But you’ve been told many times before
    Messiahs pointed to the door
    And no one had the guts to leave the temple!

  11. I think I’ve written this already in the past: we only choose cooperative banks for our family and business accounts. If we have to pay a bill, we wire the money to such a bank, if possible. We are surely a minority but I don’t think there’s a better way to act…

    As for what the churches do: it’s not surprising at all. If you are a Christian of any kind, you should have read about it in the bible. Making business is an old habit of religions and priests, and any exceptions do not change the overall picture.

    I wish schools would teach the children more about financial services. People need to know when they need a loan and when not. But educated citizens are not what our countries are after, rather dumb consumers…

    Taki

    1. I wish schools would teach the children more about financial services. People need to know when they need a loan and when not.

      Absolutely.

  12. Call me ignorant if you want, but I never heard of ‘Payday loans’/Prêts sur salaire’? here. I did some research of course and learnt that only four countries offer Payday loans: The United States, Australia, Canada and the United Kingdom. Phew… Never here, please…

    Sorry, but sometimes (well, always), people need to take responsibility, that is, not live beyond their means because of compulsive buying, not want a life they can’t afford. Why don’t they create a budget? It’s all about education once again.

    As for those who are in real need, unfortunately the ‘Payday loans’ system won’t save them. It seems to me a vicious circle, a sort of addiction where vulnerable people, once they see how easily they can get extra money, will believe that they have found a solution to their problems. Which is all the opposite. La spirale infernale, we say here.

  13. It is good to hear the CoE is trying. The House of Cameron and Clegg are the reason people are borrowing off these lowlifes. Most are from outside the UK i.e. the good old USA, and it’s so wrong that there are people out there sat on billions or millions when people, familes, children are having to borrow or rely on foodbanks. This country is so wrong (or Wong).

    Damian

  14. I think The Church should spend its money on building condom factories all around the world and make sure everyone in the world can get them free (+free lessons to use them correctly of course).

    Shhh… Pope Francis.

  15. this was a well thought out blog Fed, sometimes it serves a point of view well to approach it with long considered and fully pondered angles. when one rushes to judgement one often makes ill conceived half thoughts so good on you for that.

    the U.S. Army forbids its soldiers from partaking of payday lender suckling and for good reason. while I strongly believe free adults should not have to be forced to stay away from such decisions in this case I think you were spot on with your assessment, these vultures use trickery and legalese to position themselves behind their desperate and usually less financially astute VICTIMS so as to “service the account” as the great George Carlin so eloquently put it. the devastation wrought upon the good people these vultures prey upon, often just to keep the lights on another fortnight, is truly vile. I see nothing wrong with using a building for a good cause that helps the most needy among us. for far too long our religious congregating structures have been used as a place to “compare clothing” once a week (once again I quote the “profit” George Carlin) it makes my heart heavier still that it seems like no good intended investment cant be executed without finding out you have invested in a company that makes wholesome apple pies as well as bazookas.

    so thanks again Fed for the rays of light you have shed on this cesspool of a topic. I vote Fed for Archbishop.

    1. Thanks very much. Condom factories, to be built as a matter of urgency all around the world, it is then.

  16. An interesting topic Fed, and one of your better lead articles if I may say so …

    Interesting comments so far and a fair bit of consensus … we seem to be agreed that payday loans are a bad idea, best avoided and that the mask of respectability that Wonga, QuickQuid, Cashlady (I mean, who wouldn’t want to be sold a loan by Kerry Katona?) and their grizly competition project is unconvincing. That’s an understatement of course. They know exactly what they’re doing.

    People who need a payday loan need help. Payday lenders exploit ignorance, misfortune and poverty and seek to make substantial profits from it. A payday loan will very rarely be a solution to the problem and, as we all recognise, will far more often add to it. The defining thing about debt is that it’s very easy to get into and very, very difficult to get out of again. It’s a false prophet of sorts.

    Which brings us (rather neatly) to the Church. First I have to declare an interest. I don’t believe in God. I’m pretty definite about that. I am certain there is no God who worries about economics, micro or macro. So if you do believe, don’t going praying for help on this one. It’s more than likely He’ll arrange for your electricity to be cut off, just to make things even more challenging. So I start from the position that the Church is working from a false premise. It’s also got a shocking record in actually following the teachings of Christ, at least as far as I can see.

    That said, if they could just tone down the worshiping, superstitious bit, the traditional role of the Church as a proponent of Love, community spirit, charity and good deeds is A Good Thing. Using church buildings and volunteers to give credit unions or not-for-profit lenders a foothold to compete with the Payday lenders seems an eminently good idea. It’s interesting to observe that such lending seems to be less popular/viable in the UK than elsewhere. Didn’t we use to be good at self-help and community spirit? Where did that go? It’s also good that the Church reminds those politicians who like to praise the Lord that squeezing yourself and your trust fund through the eye of a needle can be a tricky business and that the example they claim to be following is one of love and self-sacrifice. You wouldn’t know it, would you?

    I’m not too down on the apparently embarrassing investment episode. It’s hard to insulate yourself from the wicked world. At least having an ethical investment policy, however hard in practice, means that someone’s making the effort. And I ‘m not sure this makes the Church any kind of big business. At least the ‘Bish didn’t duck and fudge the issue. Ok, so his Cassock is probably hand-stitched by Vietnamese orphans as well as our Nike trainers, but I expect they take comfort from the thought of God smiling down on their endeavours. There’s always the next life… or is that Budhism?

  17. ‘Lo all.

    FEd, I think the adverts these “loan companies” show on UK TV are contemptible. Rant over!

    Hope you’re all well, etc.

  18. Hi all,

    I was listening to a rerun of David’s fave songs recorded back in 2006 on BBC Radio 2. Hard to imagine Kate Bush wrote Man With a Child In His Eyes when she was just 15 and one of 3 demos chosen by David for EMI.

    Pink Floyd week coming up next week I hear, Fed.

    Regards
    Damian

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