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Last updated: July 25, 2013 6:09 pm
Britain’s booming payday lenders – seen by critics as “legal loan sharks” – have met a new adversary in the form of the Archbishop of Canterbury, who has promised to allow rival credit unions to set up on church property.
Justin Welby, a former finance executive in the oil industry, has described lenders such as Wonga as “morally wrong” and has compared the industry to Old Testament usurers.
Now Dr Welby, leader of the world’s Anglican community, intends to combine his sense of moral indignation with his business experience by putting the church in the frontline of providing affordable loans to the poor.
The Archbishop told the magazine Total Politics that he had already met Errol Damelin, founder and chief executive of Wonga, and had said the church would put its “money where its mouth is”.
“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 industry, which has grown rapidly from being worth about £900m to £2.2bn in the past three years, is now a prominent feature on the high street of many British towns.
Dr Welby has criticised the sector in the past but has now 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.
Stella Creasy, a Labour MP who has campaigned for a cap on credit costs and a wider crackdown on payday lenders, welcomed Dr Welby’s intervention, but said: “It should not take divine intervention to deal with this problem. It is very easy to fix.”
Mr 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 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.
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