Archbishop Justin Welby's announcement that the Church of England could be going head-to-head with payday lenders like Wonga is good to hear. Rather than limiting the options of consumers, Welby is set to expand the choices that the most vulnerable face.
In an interview with Total Politics, the former oil executive has said that he won't be pushing for state interference, but to provide an alternative to lending services:
I’ve met the head of Wonga and I’ve had a very good conversation and I said to him quite bluntly we’re not in the business of trying to legislate you out of existence, we’re trying to compete you out of existence.
This is great news on a number of counts. Primarily, it may curtail efforts to legislate against payday lenders. While these firms may charge high interest rates, their existence provides an important escape from cash constraints for the needy.
Without them, many will be trapped by the alternative of a black market lender. Loansharks are often more violent when you fail to pay up than an above board company. As they operate illegally, they can't use the courts to resolve disputes, so a baseball bat might have to do.
Better still, another lender means more options for the cash-poor. From what Welby's said, we can expect much cheaper credit for those faced with poverty. And while cheap credit bears risks, they will be on the Church of England, rather than the taxpayer.
New and exciting models of lending - like Church credit unions - are exactly what we need if we want if finance is to be innovative.