Frank Field petitions Welby on Wonga debt
A REQUEST to ensure that the pay-day loan company Wonga’s debt portfolio does not pass to another high-interest lender is being considered by the Church Commissioners.
Wonga went into administration in last month (News, 7 September) — not having been “competed out of business” as was threatened in 2013 by the Archbishop of Canterbury (News 26 July 2013), but after a surge in compensation claims. It is understood that loans totalling £400 million, held by 200,000 customers, remain on its books.
This month, the chairman of the Commons Work and Pensions Committee, Frank Field MP, wrote to the Archbishop of Canterbury, asking him to consider creating a consortium to buy up the loans. It is understood that the Commissioners were due to meet this week at Lambeth Palace to discuss the idea.
“Wonga’s loan books are likely to be sold, and, if the past record is any guide to the future, those loans will probably be sold at knockdown rates,” Mr Field wrote on Twitter this month. “Within these loan books are likely to be some devoted exclusively to the exploitation of the poor.
“Money-recovery agencies will no doubt attempt to buy these very cheaply, and make a lot of money from them. I’ve asked the administrators to remain open to a consortium of people of good will to buy the debts and deal properly with them, in a way that protects poorer people. I’ve also asked the Archbishop of Canterbury whether he might begin to build up that consortium.”
In a letter to the Archbishop, he wrote: “Would there be any chance soon of being able to talk to you on the phone to see if this idea is a runner, and whether extraordinary events could be allowed to rise from the Wonga crush?”
A spokesman for Lambeth Palace said: “We are reflecting on the letter from Frank Field to help determine what may or may not be possible in the months ahead regarding the repercussions following Wonga’s collapse.”
Financial commentators have noted that a focus on pay-day loan companies should not obscure other, larger sources of debt. The Times reports figures from a debt charity, Step Change. These showed that, although 22 per cent of the under-forties who asked for help last year had problems with pay-day loans, 65 per cent cited credit-card debt, 51 per cent overdrafts, and 41 per cent personal loans.
The Government’s cap applies to short-term loans (News, 14 December 2012).Madeleine Davies, Church Times