In Britain, payday lenders are loan companies that charge excessive rates of interest to short-term borrowers for credit they could not otherwise easily and quickly secure. Many of those who borrow in haste, from what many regard as legal loan sharks, come to regret later at their leisure. Borrowers who cannot meet their repayments face a rapidly escalating debt burden as interest costs soar on their outstanding loan. Britain’s new Archbishop of Canterbury, Justin Welby, has in his earlier ministry witnessed the negative impact that reckless lending and reckless borrowing has had on those all too easily tempted by easy access to instant credit, but blissfully ignorant of its true cost. And as archbishop he has promised to put the payday lenders out of business, and to do so by fair means - competition.
His bold plan is to open the Church of England's network of 15,000 church premises to credit unions to help tackle the problem. The credit unions could, with the support of church members, offer a lower cost lending alternative to payday lenders, and operate on a countrywide basis. Dr Welby, in driving one set of moneychangers out of the temple, albeit to accommodate another in their place, has been willing to tolerate a "little sin" for a lesser social evil. However, in his zeal for reform one matter of detail was overlooked. To his embarrassment he learned last week that the Church of England's £5.2 billion (€6 billion) investment fund had invested, indirectly, £75,000 in Wonga, Britain's largest payday lender.
The archbishop, irritated but undeterred, has promised to investigate this ethical lapse, and to press on. The church faces a huge challenge as, unlike Ireland, where credit unions have many members, Britain has few. Last year, Wonga lent far more than all of Britain's credit unions. Archbishop Welby, a former oil company executive, has shown courage and leadership in tackling a major social issue - one that British politicians have been slow to address - and in using the church's assets to good effect.
