So God has entered the ring for another bout with Mammon.
The deity is a trier, give him that. He has fought this opponent many times before, with varying degrees of success. Too often the people in his corner have not seemed to have their hearts in the contest.
This time the Kirk, the Archbishop of Canterbury and others besides assure us they are ready to take on Wonga the Merciless. They will settle for nothing less than a submission. Or as the Most Reverend Justin Welby, the Archbishop, would have it, they mean to put the most notorious of payday lenders out of business. It's a tall order.
This is not because Wonga has many fans. Even the politicians who allow the loan peddler to exist cannot find supportive things to say about a "representative" APR – representative of what, you ask – quoted at 5853%. That said, there is a sneaking suspicion the fight has been rigged.
The forces of light have been hindered already by the discovery that the Archbishop's Anglican church has itself been investing in one of the companies responsible for raising Wonga's funding. That kind of revelation does nothing for a man's sermons, though it is hardly novel in the annals of the C of E.
The Archbishop is a former banker. Presumably he does not unsheathe the sword of market forces lightly. If he believes competition from credit unions could end Wonga's inglorious career, he must have done some research. You could wonder, though, about the Archbishop's tactics.
Define the problem in language church people understand. The issue, pure and simple, is usury, which is to say lending at illegal, immoral or iniquitous rates. Thanks to relaxed British attitudes towards finance, Wonga breaks no laws, but those such as the Archbishop regard its treatment of the vulnerable as utterly immoral. The rest of us would probably settle for calling 5853% an iniquity.
Religions once had plenty to say about this kind of thing. Hinduism, Buddhism, Judaism, Christianity and Islam all condemned usurers. In ancient times, when the word civilisation meant something, societies often banned the charging of interest outright. Islamic banking still operates according to the principle that a loan is effectively an investment, with the lender hoping for a share in profits.
Simply soaking a borrower is a new-fangled notion, in other words. Britain, for one, did not rid itself of restrictions on usury until the mid-19th century, when God and Victorian values parted company. The modernisers' victim in 1854 was the English Parliament's Usury Act 1660. This had been brought in – Wonga customers may now laugh ruefully – to force interest rates down from 8% to 6%.
That detail tells us something both about the modern world and the ubiquity of what was once termed debt servitude. In the 17th century, 8% was considered outrageous and usurious. Today, respectable credit card companies treat 15% as a bargain, 20% as reasonable, and 35% as nothing out of the ordinary. Parliamentarians under Charles II would have been talking about theft.
Credit unions point to their ethical lending practices, meanwhile. But a maximum charge of 26.8%, the equivalent of 2% a month, is only cheap when set besides the amounts to which Wonga helps itself. Undaunted, the Government intends to raise the legal limit for unions to a monthly 3% because the Department for Work and Pensions believes the organisations are not "financially sustainable".
That might be the heart of the matter. Loan sharks, legal to otherwise, thrive among the desperate. They pluck their marks from the vast pool of those who do not qualify for the kind of responsible lending practised by credit unions. Unless the Archbishop and the Kirk plan to abolish poverty and hopelessness while the welfare state is being taken apart, the threat to Wonga is limited.
Church people, to be fair, are well aware of the problem. When the Reverend Sally Foster-Fulton, convener of the Kirk's Church and Society Council, calls for "a fundamental reform of our current economic system" she is picking a target far bigger than payday lending. Whether credit unions are the best vehicles for a counter-attack is another matter.
There are arguments over the reasons, but the fact remains that they have been going bust in increasing numbers. Of some 400 credit unions, five have ceased trading this year; six collapsed in 2012; and seven went out of business in 2011. Though supported by the Government, they simply cannot lend enough to enough people under the rules governing responsible behaviour.
Wonga meanwhile puts up devious arguments for the benefit of gullible free marketeers to show the 5853% figure is not "realistic". It is only displayed because of a fiddling legal requirement and only achieved, says the firm, because of the effects of compounding over a year. Its loans are offered for just 30 days, therefore – supposedly – the gargantuan percentage does not apply.
Wonga forgets about all the customers who roll over loans. It forgets about the hefty charges it applies. It has a habit, meanwhile, of treating an effective 360% APR on a 30-day loan as reasonable. Two facts remain.
First, if you borrow £400 from Wonga and repay within a month, fees and interest will add close to £120 to your bill. The same amount from a credit union will cost you less than a fiver. The second fact is that Wonga would not get away with this in most other advanced countries. Our Coalition Government wants to support credit unions because it does not want to answer an obvious question. Why on earth is 5853% even legal?
That's something else Wonga forgets to mention. In addition to Britain, it operates in Poland, South Africa and Canada. In Canada, under that country's criminal code, anyone who attempts to extract an interest rate greater than 60% is liable to go to jail. Wonga might stick up Canadians for fees and roll-over costs, but it is simply not allowed to behave as it behaves in this country.
In South Africa, to quote the firm's literature, "our service has an annual interest rate of 60%, in line with the regulations set out in the NCA". That would be the National Credit Act 2005. Why does Britain lack such legislation? Fourteen member states of the EU operate interest rate restrictions. Some impose an absolute ceiling, some a relative ceiling according to a "reference rate". In France and Germany, the latter means maximum charges in the 20-25% range.
So why not in Britain? Why leave it to churches to take on a corporate giant when unions are hobbled by rules and liquidity problems? Because the British political and financial class pretend to believe that everyone is out of step but them. Capped rates would "interfere with the market". Credit would be cut off to those "who need it most". A cap would also destroy a nice little earner for Wonga's backers.
George Osborne is meanwhile busy igniting another credit boom in the property market to see his party through the next General Election. This is no time to be stamping on loan sharks when so many institutions might qualify for that title. Besides, Mr Osborne's Government is not philosophically averse to debt servitude in the national interest.
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