Payday Loan companies

D

Departed

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This is from the Wonga Canada website:
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We're different

Wonga is different from other online lenders because our sophisticated risk and decision technology means the application and approval process takes literally minutes. We are the first company in the world to fully automate the lending process and we are able to make completely objective and responsible decisions around the clock.

There’s no paperwork, meetings with bank managers or hanging on the phone – our entire service is online and real-time. We are also uniquely flexible, allowing applicants to choose exactly how much cash they want to borrow and for how many days they need it. Our customers aren't forced to borrow a fixed amount they might not need, or pay interest for any longer than necessary.

https://www.wonga.ca/about
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Are they filling a niche the banks can't or won't service? Who are their customer's? There are laws in Canada concerning usury. There have recently been changes in the regulatory environment surrounding these operations. If they are so predatory why have they not been shut down? Are they a remnant of the free spending pre 2008 environment where government's profligate spending abounded? Or are they a necessary evil assisting those that a bank won't let in the front door?

All questions the sweeping generalists fail to answer accurately.
 
We already have several payday lenders in Canada and they are regulated under the Payday Loans Act, 2008.

The only difference with Wonga that I can see (and admittedly I can't be arsed to actual spend any time
looking) is the some of the online aspects of their offering.

Usury laws rarely, if ever, come into play now adays as the threshold for usury is 60% if I recall correctly.
 
Yup. But you would be amazed at the dominant profile of a customer of these outfits.
 
80deg16minW - 17/7/2013 12:33

Yup. But you would be amazed at the dominant profile of a customer of these outfits.
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Several years ago I had a long conversation with someone who worked for one of these payday loan companies about exactly that at a real estate conference. The profile wasn't as bad as I had imagined. Most had steady jobs, rented their dwelling, had minimal assets and no savings. Most had low debt loads as they can't get credit from tradtional lenders. They indicated that the default rate was also much lower than I expected which makes the rates they charge even more obscene.
 
I have a pretty good insight into the business via an acquaintance that owns his own smaller version with a number of outlets. Teachers, hydro workers, real estate agents, car sales people all use his service. They are his bread and butter. It was very surprising to me.

They get around the rate issue with "transaction fees". Something banks have mastered when lending to small businesses.
 
80deg16minW - 17/7/2013 13:15

I have a pretty good insight into the business via an acquaintance that owns his own smaller version with a number of outlets. Teachers, hydro workers, real estate agents, car sales people all use his service. They are his bread and butter. It was very surprising to me.

They get around the rate issue with "transaction fees". Something banks have mastered when lending to small businesses.
Click to expand...

In my former area of the lending world you have to include the fees when calculating the cost and disclose the effective interest rate.s that isn't the case with these guys.
 
Can't say about Canada - before Harper, it used to have one of the most sensible regimes in the major western democracies - but this is the view from below the border in the USA.

http://soldieroffinance.com/danger-payday-loans-are-a-weapon-of-mass-destruction/


Danger! Payday Loans are a Weapon of Mass Destruction



According to Wikipedia weapon of mass destruction (WMD) is a weapon that can kill and bring significant harm to a large numbers of humans (and other life forms) and/or cause great damage to man-made structures (e.g. buildings), natural structures (e.g. mountains), or the biosphere in general.

WMD’s can harm innocent people and there’s no stopping them. Currently, I’m creating a list of the “Financial Weapons of Mass Destruction”. These are product or services that I feel that offer no real value and are causing great harm to the financial health of many Americans. Topping that unpopular list would be Payday loans. I’ve been fortunate to have never had a direct run in with payday loans. It wasn’t until I had a meeting with someone that was approaching retirement, that I truly learned how evil they can be.

In a nutshell, the lady I had met with was struggling. She was 70 years old and still working. Somehow, despite her simple lifestyle, she was having a hard time trying to make ends meet. Faced with unpaid bills and a late house payment, she turned to the easiest source of quick cash she could think of: payday loans.

So how bad was it?

One of the loans she took out had a 521% interest rate!

Like I said, I’ve never had a direct run in with payday loans, so initially I thought it was a typo.

It wasn’t a typo.

That was her interest rate. An astronomical 521%!

That meeting got me thinking about how many other people fall victim to these outrageous loans. And how in the hell is that legal? According to the Americans for Fairness in Lending here are some convincing stats:

Payday loans cost consumers over $4.2 billion in predatory fees each year.
The typical payday borrower pays back $793 for a $325 loan.
Ninety percent of the payday industry’s revenues come from consumers who get five or more loans in a year.
For two-week payday loans, finance charges result in interest rates from 390% to 780% APR. The first APR is for a fee of $15 per $100 borrowed, the second APR results from a fee of $30 per $100 borrowed.
The fifteen states (and DC) which have banned payday lending, are saving their residents a total of $1.8 billion per year in predatory payday loan fees.
There are more payday stores in the United States than McDonald’s restaurants. At the start of start of 2008, industry analysts claimed that about 23,600 payday storefronts in operation.

Did you catch that last stat?

More payday stores than McDonald’s.


Payday loans can be tempting in times of financial stress. After all, they offer quick access to money, and if you’re faced with expenses or bills you can’t figure out how to pay, the idea of quick cash to solve all of your problems temporarily is hard to pass up. Just like the lady I met with. Many people unable to access other sources of credit, like credit cards, personal loans or even overdraft privileges with their bank – often resort to getting a payday loan. Other sources of credit can also take quite a bit longer to obtain where as a payday loan is often within 24 hours, making it even more tempting to someone in need of fast money.

If this is you and your contemplating getting a loan…..STOP! There are other options. If you’re still not convinced, here are more good reasons to avoid payday loans.
Payday Loans Have Expensive Consequences

A payday loan may solve your immediate need for money, but it’s not free. In fact, there are some very expensive consequences to borrowing money with a payday loan. Often, a flat fee of 20% of the amount borrowed is added to the loan, and even if you’re able to repay the loan in just a few days, you have to pay this amount. If you borrow a payday loan of $1,500 you’ll pay a flat fee of $300 even before any interest or late fees accrue.

Because payday loans are meant to provide money in between pay periods, if you are unable to pay the loan back with your next paycheck, you’ll also pay interest and late fees on top of the flat fee. The interest and late fees accumulate quickly, for as long as you are unable to pay the amount back in full.
Payday Loans Commonly Result in Repeat Borrowing

For many people looking to borrow from a payday loan, a viscous cycle of payday loan borrowing begins. When the first loan becomes due, it’s not unusual for someone to take out a new payday loan to pay off the first one, hoping to avoid ongoing interest and late fees. These people hope that by the next pay period they’ll be able to pay off the second loan, but the cycle is very hard to escape since the flat fee and monthly interest or late fees accumulate so quickly on payday loans.

Some payday lenders will only allow you to borrow a certain amount of money in a year; or will begin reducing the amount of money you’re allowed to borrow each time, even if you’re using the new payday loans to pay off older payday loans. In many states, payday loans are illegal because of their excessive fees and because they take advantage of individuals who are in bad financial situations.
Payday Loans Don’t Solve Financial Difficulties

The main reason an individual would turn to a payday loan is because they are experiencing financial struggles that seem impossible to fix with their own income or through their access to other money sources. While a payday loan may appear to fix the most immediate need for cash, it’s a short term solution at best, and will almost always result in long-term financial problems that are even worse than what you started with.

In regards to the lady I met with, was it all the payday loan store’s fault? Of course not. She knew exactly what she was doing and how much the interest rate was. Where she went wrong was that she wasn’t managing our finances well. Period. Don’t fall in her same trap. Take charge and figure out a Plan B.

Sources:

http://www.affil.org/consumer_rsc/payday.php
 
And the view from the UK:

http://www.guardian.co.uk/money/2013/jun/21/wonga-increases-apr-1600


Wonga increases its typical APR by 1,600%

Lender changes basis for APR calculation to reflect increasing numbers of applicants 'taking smaller and shorter loans' but borrowers won't pay more


Hilary Osborne
guardian.co.uk, Friday 21 June 2013 13.07 BST


Newcastle United FC announce Wonga as a sponsor
Wonga, a new sponsor of Newcastle United FC, is one of 50 payday lenders told to clean up their act by the OFT.

Payday lender Wonga has raised the standard interest rate it quotes on its website by more than 1,600 percentage points to 5,853% – a move that is likely to increase calls for a cap on the cost of short-term credit.

The change comes as the Office of Fair Trading prepares to announce next week whether it will refer the payday loan industry to the Competition Commission following a year-long investigation.

Wonga, which offers loans of up to £1,000 arranged over periods of up to 45 days, previously quoted a typical annual percentage rate (APR) of 4,214%.

The new APR is based on a £150 loan taken out over 18 days, which would add up to £183.49 after adding fees and interest, with the quoted interest rate assuming that the loan is extended over a year.

Wonga has not put up its charges, with borrowing still costing £1 a day plus a £5.50 "transmission charge", but has instead reduced the size of the loan on which the APR calculation is based. It said this was because "more approved applicants are taking smaller and shorter loans now".

Wonga, like other payday lenders, has always claimed that the APR is not a true reflection of the cost of the loan, as borrowers usually repay them within weeks. It argues that it should instead be allowed to quote a "Total Cost of Credit" figure.

Explaining the change on its Open Wonga blog, the company said: "While shorter Wonga loans cost less in real terms for our customers, this trend means a bigger representative APR. It's crazy but true.

"This is just another example of why not only we, but the Public Accounts Committee – a cross-party group of MPs – think the APR rules are 'outdated and misleading' when it comes to short-term credit."

However, critics of the industry point out that debts can add up quickly if borrowers miss repayments or roll their loans over.

Some, including Labour's Stella Creasy, have called for a cap on the overall cost of borrowing in common with parts of Europe and the US. On Wednesday, Paul Blomfield MP put forward a private members' bill with measures to cap excessive charges.

Blomfield said Wonga's APR was "just another example why there needs to be tougher regulation of payday money lenders".

He added: "These interest rates are outrageous but only tell half the story. Borrowers are also encouraged to roll their loans over and face additional charges. My bill tries to tackle all of these issues."

Separately, Wonga has dropped an appeal against the Office of Fair Trading (OFT) over its debt-collection practices.

It was told to make changes in 2012 after the regulator found it had written to struggling borrowers suggesting they may be guilty of fraud, and that Wonga would consider contacting the police if the customer did not act as it requested.

The OFT said that Wonga must not continue to do this without justification. It also told it to end another practice whereby people in certain occupations were told they should not be in debt.

After spending a year fighting the requirements, a Wonga spokesman said: "Regulation and compliance are extremely important to us, so we have decided to focus our resources on the requirements of the current OFT industry review rather than on an appeal about some isolated collections communications from over three years ago.

"Our collections team is sensitive to the needs of customers in genuine difficulty, while we also continue to keep bad debt at industry-leading lows."David Fisher, OFT senior director of consumer credit, said: "We imposed this requirement to make sure Wonga does not use certain debt collection practices it previously used. We welcome Wonga's decision to withdraw its appeal."
 
Of course, you can read all the evidence and make up your own minds.

Needless to say, I think Wonga are the scum of the earth, feeding fat upon the real miseries that ordinary people find themselves in in these days of economic depression and austerity. They are the carbuncles on the ass of a morally bankrupt and increasingly malevolent government and the fact that, like a disease, they have infected the game I love, is all the more reprehensible.

Whether Papiss Cisse is a player for the mighty Spurs or not, whether his objections to Wonga are 'moral' or 'religious', I salute his bringing this out into the open.
 
Innis, I think our payday lenders are better regulated here in Canada. They are still scum...just better regulated scum.
 
CanadianSpur - 17/7/2013 22:52

Innis, I think our payday lenders are better regulated here in Canada. They are still scum...just better regulated scum.
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As a 'semi-Canadian', I hope you are right.

The fact is, though, that when austerity ends, this vermin will disappear back into the sewers it emerged from, both here and in North America
 
If Cisse doesn't like the system, he can feck off and play in Saudi where he'll find a far better and more democratic option, which will, no doubt, also suit his religious mores....cough. The upside of that, for him, of course, is that Saudi doesn't have mouth-breathing know-all-know-nothing socialists who think they can run people's lives better than the person involved, and determine what is good for them, as they are too stupid to work it out for themselves.
 
Innispurs - 17/7/2013 22:58

CanadianSpur - 17/7/2013 22:52

Innis, I think our payday lenders are better regulated here in Canada. They are still scum...just better regulated scum.
Click to expand...

As a 'semi-Canadian', I hope you are right.

The fact is, though, that when austerity ends, this vermin will disappear back into the sewers it emerged from, both here and in North America
Click to expand...

No they won't disappear. They were alive and.prosperous long before austerity became a factor. They fill a niche. It is why they survive and thrive.
 
http://www.themag.co.uk/the-mag-articles/city-council-bans-payday-loan-companies-from-advertising-on-bus-shelters-billboards/

City Council Bans Payday Loan Companies From Advertising On Bus Shelters & Billboards
1 hour ago by Graham Porter

In a ground breaking move, a City Council has banned payday loan companies from advertising on both billboards and bus shelters.

NewStrip_NUFC01Plymouth Council is the first to do so, as well as blocking access on public computers in community centres and libraries to the 50 most popular payday loan websites.

It is a brave move in these times of austerity because there could be a cost to the Council and the local population but they believe they have a duty to try and protect residents from spiralling further into debt.

Plymouth City Council believe that there are as many as 5,000 residents with short-term loans from companies such as Wonga.

.Community development cabinet member, Chris Penberthy said;

“Plymouth’s advice agencies are taking calls daily from people who are running up huge debts that are causing stress and hardship them and their families. We need to protect people and make it difficult for payday loan companies to operate in our city but we do recognise times are hard.”

The trade association of short-term lenders, The Consumer Finance Association, stated;

“We operate to high standards which protect consumers at all times.

Our members apply the same level of expertise to assessing credit worthiness as banks and credit card providers and will not lend to you if they think it will make your financial situation worse.”

Newcastle City Council have already been in conflict with Newcastle United when Mike Ashley renamed St.James’ Park the SD Arena and refused to change road signs etc. So if Plymouth’s initiative spreads then it will be interesting to see if Newcastle City Council feel compelled to do the same for their residents as their Plymouth counterparts have, especially in terms of their relationship with the football club.
 
The War on Wonga: Archbishop of Canterbury Justin Welby tells payday loans company, 'We're putting you out of business'

Justin Welby aims to use Church credit unions to legislate lender out of existence
Andrew Grice

Wednesday 24 July 2013
The Archbishop of Canterbury has vowed to put payday lenders out of business by using the Church to build up Britain’s network of credit unions.

The Most Rev Justin Welby has told Errol Damelin, the founder and chief executive of Wonga, about his ambition to make the controversial lenders redundant – by helping the 500 financial co-operatives, which already provide small loans to their members, play a much bigger role in helping people with money problems.

The Church of England has already set up a credit union for its own staff, which will advise the other co-ops on how to expand their reach.

Officials believe the problem is not the number of unions but ensuring greater access to them. The Church will allow them to use its buildings and schools and encourage Church members with the right expertise to volunteer with them.

The Archbishop, a former oil industry executive and a member of the Parliamentary Commission on Banking Standards, has pointed out that the Church has 16,000 branches in 9,000 communities – more than the banks. In an interview with Total Politics magazine, he said: “I’ve met the head of Wonga and we 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.’ He’s a businessman, he took that well.”

The Archbishop added: “We’ve got to have credit unions that are both engaged in their communities and much more professional, and the third thing is people have got to know about them. It’s a decade-long process.

“We’re putting our money where our mouth is, we’re starting a Church of England staff credit union. You’ve got to have a corporate interest body to identify who’s members of the credit union. We’re starting one of those so we’re actually getting involved ourselves. We’re working steadily with the main trade bodies for the credit unions.”

The Department for Business Innovation and Skills is providing £35m over 10 years to help credit unions grow and has lightened the regulatory burdens on them.

In the interview, the Archbishop criticised Conservative ministers for trying to drive a wedge between “scroungers” on benefits and “strivers” in work. He said: “The rhetoric is very damaging.

“Of course some people are scroungers, some multi-millionaires are scroungers, you find people who behave wrongly, badly, wickedly across the whole range of the social spectrum. It’s nothing to do with being on welfare, I mean goodness knows we’ve looked at the banking system over the last year.”

He added: “We shouldn’t stereotype people in a particular category as scroungers, that’s not the right way to talk about people.”

He revealed that he considered entering politics but admitted: “It didn’t really work out very well because I couldn’t decide which side to go for. Which is probably why I ended up as a clergyman, as you said earlier, sitting on the fence.”

The Archbishop also suggested the Church is bracing itself for more scandals over sexual abuse by clergy. Asked if it was through the worst of the revelations, he replied: “No. We’re not… We got it wrong over many years when society had a different view of these things… there will be cases, some of which go back for 40, 50 years in which people were overlooked and ignored.” Saying it was “utterly inexcusable,” he admitted he expected “quite a bit of stuff will go on coming out”.

He hinted the Church may take inspiration from the Royal Family. “Absolute genius. If you could bottle it, there wouldn’t be a government in the world that wouldn’t buy it. It’s not manipulation. It is a genuine, profoundly thoughtful, extremely humble, determined recognition that the world has changed, and a response to that in all sorts of ways. They are probably more popular than they have ever been.”








 
I totally disagree with companies like WONGA being able to offer such ridiculous loans. You may as well borrow from the mafia or loan sharks. I also disagree with the Church of England getting involved with this business. If people need a hand out or a leg up, that's what the Church is for and should be on an individual basis, which happens naturally in all good churches (at least almost all of the one's I have been involved with. The Church of England should not become a nanny state figure but for the people in the churches to give help when others are in real need. There will always be the situation where the greedy rather than the needy will take everything that's going for free and that disinclines people to try and get themselves out of their problems and put their responsibilities on someone else. Totally wrong thinking.

All the good charities I have been involved with provide an infrastructure of help which starts people on the road to providing well for themselves and their families, rather than just hand out hard earned capital to those who will just keep holding their hands out.

I wish people would see sense on these issues.
 
Innispurs - 25/7/2013 00:14

The War on Wonga: Archbishop of Canterbury Justin Welby tells payday loans company, 'We're putting you out of business'

Justin Welby aims to use Church credit unions to legislate lender out of existence
Andrew Grice

Wednesday 24 July 2013
The Archbishop of Canterbury has vowed to put payday lenders out of business by using the Church to build up Britain’s network of credit unions.

The Most Rev Justin Welby has told Errol Damelin, the founder and chief executive of Wonga, about his ambition to make the controversial lenders redundant – by helping the 500 financial co-operatives, which already provide small loans to their members, play a much bigger role in helping people with money problems.

The Church of England has already set up a credit union for its own staff, which will advise the other co-ops on how to expand their reach.

Officials believe the problem is not the number of unions but ensuring greater access to them. The Church will allow them to use its buildings and schools and encourage Church members with the right expertise to volunteer with them.

The Archbishop, a former oil industry executive and a member of the Parliamentary Commission on Banking Standards, has pointed out that the Church has 16,000 branches in 9,000 communities – more than the banks. In an interview with Total Politics magazine, he said: “I’ve met the head of Wonga and we 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.’ He’s a businessman, he took that well.”

The Archbishop added: “We’ve got to have credit unions that are both engaged in their communities and much more professional, and the third thing is people have got to know about them. It’s a decade-long process.

“We’re putting our money where our mouth is, we’re starting a Church of England staff credit union. You’ve got to have a corporate interest body to identify who’s members of the credit union. We’re starting one of those so we’re actually getting involved ourselves. We’re working steadily with the main trade bodies for the credit unions.”

The Department for Business Innovation and Skills is providing £35m over 10 years to help credit unions grow and has lightened the regulatory burdens on them.

In the interview, the Archbishop criticised Conservative ministers for trying to drive a wedge between “scroungers” on benefits and “strivers” in work. He said: “The rhetoric is very damaging.

“Of course some people are scroungers, some multi-millionaires are scroungers, you find people who behave wrongly, badly, wickedly across the whole range of the social spectrum. It’s nothing to do with being on welfare, I mean goodness knows we’ve looked at the banking system over the last year.”

He added: “We shouldn’t stereotype people in a particular category as scroungers, that’s not the right way to talk about people.”

He revealed that he considered entering politics but admitted: “It didn’t really work out very well because I couldn’t decide which side to go for. Which is probably why I ended up as a clergyman, as you said earlier, sitting on the fence.”

The Archbishop also suggested the Church is bracing itself for more scandals over sexual abuse by clergy. Asked if it was through the worst of the revelations, he replied: “No. We’re not… We got it wrong over many years when society had a different view of these things… there will be cases, some of which go back for 40, 50 years in which people were overlooked and ignored.” Saying it was “utterly inexcusable,” he admitted he expected “quite a bit of stuff will go on coming out”.

He hinted the Church may take inspiration from the Royal Family. “Absolute genius. If you could bottle it, there wouldn’t be a government in the world that wouldn’t buy it. It’s not manipulation. It is a genuine, profoundly thoughtful, extremely humble, determined recognition that the world has changed, and a response to that in all sorts of ways. They are probably more popular than they have ever been.”
Click to expand...

'Competition' = works for me. Payday loan companies will have to adapt or die, as they really came about in the first instance as an alturnative to the loan sharks and pawn shops/cash converters that have existed since man has...

'Public funds' = filling a market gap. As long as it's a pump and prime funding, all for it.

'Rhetoric' = used by all sides in this multi-faceted 'debate'.

 
While the Church of England and their credit unions could commended for their altruistic venture I think they will find that they run into a brick wall. That brick wall will be operating costs.

It is not a financially viable business to lend amounts under a certain amount unless it is via a credit card or similar facility using standard interest charges. Secondly, I and everyone else should, have a problem with funds raised via the Church under tax exempt conditions being used for business purposes. It opens the door for huge abuse....as if there isn't enough now. We are letting a holy corrupt entity into a legally corrupt business. Never was the saying "God Help Us" more appropriate.
 
Well the CoE have just shot themselves in both feet - they're an investor in Wonga! LOL!

You really couldn't make it up...now, they are 'not as bad as some are!!?'

As for using credit unions, it will never work simply because the defalt rate is so high for payday type loans that to stay in business they'd end up charging pretty similiar fees and rates..

I hate payday loan type companies, but then I'm sick to death of telling people about the evils of both personal and nation debt and where it eventually leads..
 
he clearly doesn't have a head for business either...



Archbishop of Canterbury embarrassed about church's financial link to Wonga

Justin Welby 'irritated' to discover Church of England holds indirect £75,000 stake in payday lender he singled out for criticism

Peter Walker
guardian.co.uk, Friday 26 July 2013 09.32 BST


Link to video: Justin Welby: Wonga investment should not have happened

The archbishop of Canterbury, Justin Welby, has said he was annoyed and embarrassed to learn the Church of England holds an indirect stake in Wonga, the payday lender he promised to bring down through fairer competition, and has called for the church to rethink its investment guidelines.

Welby told BBC Radio 4's Today programme he was disappointed to discover the church's £5.5bn investment portfolio included a stake in Accel Partners, a US venture capitalist that co-funded the launch of Wonga, who Welby singled out when he called for an expansion to credit unions as a means to "compete" payday lenders out of existence.

Asked to rate his embarrassment on a scale of one to 10, he replied, "About eight".

"It shouldn't happen, it's very embarrassing, but these things do happen," he said. "We have to find out why and make sure it doesn't happen again."

Welby said the holding in Accel was worth about £75,000. He added: "I was irritated for a few minutes, but these things happen. I understand the business – it's an incredibly complex business."

Welby said he was unsure whether the investment in Accel broke church guidelines, one of which dictates that money should not be put into companies where 25% or more of its business is connected to such lending. However, he stressed that the investment should not have happened at all: "They shouldn't be investing in Wonga. We don't think it's a good thing."

Such ratios were set by the church's ethical investment advisory group, Welby said, which was independent from him. Nonetheless, he said he would call for a change to guidelines, which also allow the church to invest in companies with very small interests in things such as gambling and pornography: "We have to review these levels and make sure we're entirely consistent between what we're saying and what we're doing."

Asked if such guidelines suggest the church thought "a little sin" was tolerable Welby, understandably, disagreed – "Just for the record, I'm not in favour of sin" – but also stressed the complexity of such investments, for example asking whether the fact hotel chains make pornography available to guests meant the church should never invest in the entire sector.

"If you exclude any contact with anything that directly or indirectly at any point gets you anywhere bad, you can't do anything at all," he said. Welby added: "We can't say that we tolerate bad things, but you've got to live in the real world, and living in the real world means life is often very complicated and you can't escape the complexity."

However, he was clear that connection to payday lending was definitely wrong: "This is an embarrassment. We think that the payday lenders charge vastly excessive amounts for the loans they make. There is a totally inadequate range of choice for consumers in deprived areas. I've seen it. I've lived in these areas and worked in them. I've had staff who've been caught up in it and have had to be helped, and have had their lives destroyed by it. This is something that really matters to me."

Welby insisted he had never specifically targeted Wonga, calling them one of the more professionally managed companies in the sector, but had been answering a direct question about them when, earlier this week, he recounted a conversation with Wonga's chief executive, Errol Damelin.

"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'," he told Total Politics magazine.

Welby told Today he did not support regulation to curb payday lenders' activities, for example credit caps: "If we try and cap interest rates and drive the legal payday lenders out of business through regulation people become desperate – and there's no consumer choice in a lot of our deprived areas – will end up with the loansharks, who are just a totally different kettle of fish, very much worse."

Instead, Welby said, he wanted the church to support a massive expansion of credit unions in poorer areas. Even these, he conceded, would be obliged to lend short-term at an annualised interest rate of about 70% or 80%, something he argued was hugely less than that charged by payday lenders: "It's a huge sum of money, but it's better than 5,500%."

He conceded there were potential problems with the church becoming directly involved in such a trade, but argued: "It's better to have a go than to just stand and wring your hands and say, it's all terrible."
 
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