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Five years after the Archbishop of Canterbury said the church would compete Wonga out of business, the payday lenders announce they’re going into administration.
The company announced on Thursday morning that they were no longer accepting applications for loans but would continue to serve existing companies. However, by Thursday evening Wonga revealed they had filed for administration.
The news will put 500 jobs at risk and corporate undertakers at Grant Thornton have been appointed to carry out the administration.
Wonga and similar lenders have long been criticised by the church, most notably five years ago when the Archbishop of Canterbury, Justin Welby, announced the church would compete Wonga out of business by supporting what they saw as more ethical credit unions - declaring not to simply lambaste Wonga but to become their moral rival.
As part of that vision, the Just Finance Foundation was set up with Archbishop Justin as their President; an organisation which aims to provide responsible credit options to all through education about banking and debt but also by supplying fair financial services themselves.
Working with the Just Finance Foundation, James Henderson is the Development Worker for Transforming Communities Together in the Black Country and Staffordshire - who work with churches to do social action, including debt counselling and preparing people for universal credit.
He told Premier how he felt about the end of Wonga loans: “I think it’s actually good news on people with low incomes. In 2014, the financial conduct authority found that Wonga’s debt collection practises were unfair and I think that’s been really hard on people with low incomes who’ve had no choice but to take out pay day loans."
When asked why the church think payday loan companies are wrong he said: “It’s the amount of interest that they charge. So, they would argue that they just lend to people for a very short term but what was happening is that those debts kept rolling over and over and people got into really levels of debt that they just couldn’t afford to pay pack because the interest rates were just so, so high."
Henderson added why it should be a Christian concern specifically: “Jesus talks more about money in the Bible second only to the Kingdom. So, if it’s something that Jesus talks about so much, it’s definitely something that churches should be talking about. And we see that day to day across the Black Country where churches are really supporting people in financial hardship.”
One way in which many churches are practically trying to improve the financial stability of people who need help is through credit unions.
Henderson explained how they work: "A credit union is a much different model so it’s actually owned by it’s members so it’s more of a co-operative model and they charge lower rates of interest than Wonga did and they’re really good at helping people to save as well, which is really important. So, lots of the people that we’re working with - that's the first time that they’ve been able to save because their local credit union has encouraged them to do so. “
You can listen to the full interview with James Henderson and Cara Bentley on Premier's News Hour here:
For more information about what Christians are doing to improve financial stability, listen to this extended report on The War on Wonga - Five Years On:
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