How the Church of England is still fighting the War on Wonga
Five years ago the archbishop of Canterbury declared 'War on Wonga'. Taking on Britain's largest payday company was part and parcel of the Archbishop's wider efforts to tackle harmful high-cost lending and promote fair and affordable finance, particularly to those whom the financial system excludes or harms.
At its peak, the total amount lent by payday companies was around £3.7bn in 2012, with a large number of loans usually given to the financially vulnerable, struggling to make ends meet. To many, what looked like a lifeline turned out to be an ever-tightening noose, with interest rates climbing as high as 5,853% APR (Annual Percentage Rate).
Five years on, the 'War on Wonga' continues and it still matters. It matters because at stake is nothing less than the flourishing of people made in God's image, and the health of communities. Debt is not an 'economic issue' (whatever that is) but a deeply moral one. It's not primarily about numbers and balance sheets, but about relationships, people embedded in communities, with responsibilities, vulnerabilities and needs. The challenge, then and now, is to create a common life in which credit does not crush people but contributes to the common good, where debt strengthens rather than splinters communities.
The archbishop called the sky-high interest rates of payday lenders 'sinful'. However, he made it clear the Church was not in the business of regulating payday companies like Wonga out of existence, but was ready to outcompete them through fairer and more responsible alternatives.
The positive vision was to spark the Church's imagination for fostering an alternative economic life. A common life based on mutual commitment and generosity that would serve all, particularly the financially disadvantaged and vulnerable. Practically, it was to invite credit unions to church – to use the network of churches in the country to set up credit unions, community-based collectives that offer savings accounts and short-term loans that would boost competition for short term credit and provide a moral and relationships-focused alternative to the detrimental practices of mainstream payday lenders.
Significant progress has been made since 2013. Of the many initiatives that came out of the archbishop's prophetic challenge was the Church Credit Champions Network set up by the Centre for Theology and Community (later developed into the Just Finance Foundation). The network was established to support churches seeking to work with credit unions and provide fair and affordable credit, drawing on the unique logistical and relational resources of the church.