Bigger fish to fry

Financial Adviser

The recently appointed Archbishop of Canterbury, Justin Welby, has launched a holy war on payday lenders. The Archbishop, a former trader, has decided that payday lenders, and in particular Wonga, is evil and must be wiped out.

Apart from the fact that the Archbishop is obviously becoming addicted to tabloid publicity, a Faustian pact if ever there was one, he made the rather embarrassing error of speaking before checking his facts, only to discover when it was too late that the C of E had invested about £75,000 in the founding of Wonga.

That aside, it is always welcoming when organised religion shows that it has a social gospel, that its only concern is not other-worldiness, but include the everyday pressures on ordinary households.

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However, to those not influenced by populist hysteria, it looks as if the Archbishop is lining up his troops to shoot down an insignificant target. As we have said before, banks have a social responsibility beyond profitability part of which is to extend a service to those temporarily cash-strapped.

If banks were to extend this utility service, emergency funding, to ordinary men and women – and this obligation forms part of their systemic duties – of about £300 to £500, the payday lenders’ business model will be ground in the dust.

It is this failure that has opened the space that allowed payday lenders to enter the market place. But there is a bigger issue, and that is that the FSA, and presumably its successor body the FCA, had no truck with credit unions, the Archbishop’s alternative.

The FSA saw them – and the PRA continues – as risky, amateurish and prone to dishonesty. They are over-regulated and should be allowed to grow as neighbourhood organisations.

Of course, payday lenders are not angels, but the Archbishop, in his rush for the moral highground, can be accused of picking low hanging fruit. In his hierarchy of moral commandments, there are far worse examples he could have picked upon. How about the utilities who continue to penalise the poor for wanting pre-paid meters or because they cannot pay their bills by direct debit?