The Archbishop of Canterbury, Justin Welby, has put forth plans to compete with payday loan companies by allowing credit unions to establish offices on Church of England premises.
Welby says that the church will be “putting our money where our mouth is” by developing an alternative for those on low incomes.
Payday loan companies such as Wonga have been described as legal loan sharks by the church and government figures for allowing low-income people to take out quick, super-high-interest loans against their salary.
Credit unions, on the other hand, offer low-cost personal loans within small communities and were established to serve community interests rather than for profit.
The archbishop, who took control of the church on March 21, has already met with the owner of Wonga, the leading company in payday loans.
“I said to him quite bluntly [that] we’re not in the business of trying to legislate you out of existence; we’re trying to compete you out of existence,” the archbishop said. “He’s a businessman; he took that well.”
The payday loan industry has grown in recent years, from 900 million pounds ($1.35 billion) in 2009 to more than $3.3 billion in 2012.
While the church has long been against the activities of payday companies, this is the first time the church has opened the doors of its 16,000 premises to the UK’s 500 financial cooperatives.
The leader of the Church of England, which is the titular head of the worldwide Anglican Communion and its approximately 80 million members, said he was embarking on a “decade long process” to make credit unions more engaged in their communities and more professional. He has already launched a new credit union for the clergy and church staff at the General Synod in York earlier this month.