Let 'em in!

The new Archbishop of Canterbury has this week taken a huge step in bringing the people closer to the church and vice versa. He has skillfully exploited his background in financial circles to address the growing problem of debt. The growth of so called “pay-day” lenders in recent years has been alarming. Alarming on many counts. Such lenders can only thrive if people use them. That they choose to inflict such immoral interest rates as scandalous. That they are permitted to do so is more so.

There comes a rate of interest above which the reality of being able to repay a debt is just about impossible. Of course, there is a misnomer here. “Pay-day” lenders by their name imply that they only lend money to those in work who actually have a “pay-day”. Research reveals that many of their customers are not in work. To exploit people with such paltry incomes is amoral. It has been shown that over half of their customers will never be able to repay the money which they have borrowed. The business model of these companies is therefore dependent on misery. It must be depressing beyond words to be caught in this trap.

Years ago I operated as a self employed financial advisor and was governed at that time by LAUTRO (The life insurance and unit trusts regulatory authority). We couldn’t enter in to business with anybody unless it could be clearly shown that they had a net disposable income in the first place. As you would expect, for various reasons there were those who fudged the figures in order to bypass the constraints of the regulation. Sadly, that is human nature. I saw deals done which were plainly lacking in substance but they were still concluded - partly due to the wishes of the buyer and partly due to the greed of the seller. The practice of the “pay-day lenders” is no different.  I’m ashamed to say that it was not unusual to see life insurance being sold to people who had nobody financially dependent upon them. Looking back, I’m glad that I stuck to my principles.

Despite the best efforts of the left wing financial times to try and imply impropriety in the financial dealings of the church, Justin Welby has hit upon something with this proposal. Shock horror, the financial times has delved deep and found that the church has indirectly invested £75,000 in Wonga, the very company to whose practices the archbishop is so opposed. This is a non-story. In today’s world, it is impossible to not be indirectly involved with all sorts of undesirable companies. In fact, the only sure fire way of avoiding such involvement is to save cash in a shoe box – provided the box wasn’t made by child labour or financed by a private equity company with a stake in Wonga. See what I mean? Your pension be it private or company will have its money invested in a wide spread of companies some of which you approve of and some which would make your blood boil. But if in the end you had sufficient money upon which to retire, I’m sure you’d be reasonably happy.

The brainwave of the Archbishop is to utilise the tens of thousands of churches at his disposal to double up as credit unions geared to providing real competition to the unscrupulous “pay day lenders”. He estimates that an APR of about 60-70% should be low enough to provide the sort of alternative with which the big companies can’t compete. If 60-70% sounds high – and it is – it is a drop in the ocean compared to the rates charged by Wonga et al.

Opening the doors of the churches should have been the norm anyway. That said, this is a great way to re-engage with the public. The church has seldom felt more isolated. The people who sustain these lenders deserve better. While the vast majority are undoubtedly living a hand to mouth existence, a bit of moral guidance wouldn’t go amiss. Living within our means is always a tough lesson to learn. The church has a duty to remind people of the importance of cutting their cloth according means. Not an easy thing to do in an era of unmatched marketing with constant pressure to keep up in the material world. The church has already played a big part in the development of food banks around the country. This is precisely the sort of role to which it is best suited. Money and food are a physical support but it is faith which will help people back on to the right path.

The Newcastle United striker Papisse Cisse recently threatened not to play for the club again on the grounds of his muslim faith. Despite having to back down for contractual reasons, he is to be admired for taking this stance. It reflects well on him and his faith. The club sponsor is Wonga and their logo is emblazoned on the shirt front.

A move back to cash is already well on the way. I have observed a lot more cash being used in recent months. This is no bad thing. It seems as though people are going back to the basic principle of living only on the cash in their pocket. If more people adopt this, the banks will have to feel the pain for a change. They have had it all their own way for a long time and have made money hand over fist for a long time. Not content with that, their greed almost brought the country to its knees in 2008.

I wish the Archbishop luck because his plan has the potential to address many of our current problems. Aside from money, food and faith, his real masterstroke is to seek to re-acquaint us with our fellow man. Society and communities will be the winners and the all conquering financial institutions will receive a timely reminder as to where they really belong in the social pecking order. Just as the youth could benefit from faith and guidance, the church could benefit enormously from their energy. Ageing congregations are not being replaced and the church is in grave danger of having thousands of churches with nobody to use them. That would be the biggest scandal of all. As the Wings song goes, “Do me a favour, Open the door, And let ‘em in”.