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Welby to rally non-profit group to try to protect borrowers after loan firm collapsed

Robert Booth Social affairs correspondent
Fri 14 Sep 2018 18.18 BST

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The archbishop of Canterbury is to lead a not-for-profit attempt to buy the £400m Wonga loan book after the company collapsed under a welter of compensation claims, the Guardian can reveal.

The Most Rev Justin Welby will next week convene investors and charitable foundations at Lambeth Palace to explore the possibility of a bid for the loans in an effort to protect about 200,000 borrowers who could otherwise be forced to pay back their debts at high rates by a commercial lending firm.

A proposal that the Church of England should buy the loan book using its £7bn in assets was made this week by the Labour MP Frank Field. As chair of the Commons work and pensions committee, Field has asked Wonga’s administrators to delay making any deal with private companies while the church considers what it could do.

Justin Welby

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Justin Welby. Photograph: Yui Mok/PA
The MP said Welby showed enthusiasm for the idea and forwarded his proposal to the church commissioners, asking them to act if possible.

Field has also passed on the names of organisations interested in being part of the consortium to take over the company, which collapsed last month. He said he believed that after the Wonga debts were handled it could develop into a low-cost payday lender, charging nominal interest rates for short-term advances that could be paid back directly from benefit cheques, reducing the risk for backers.
The administrators have said they will consider all proposals. Under the Insolvency Act, its role is to realise the assets and distribute them for the benefit of creditors.

After consideration by the commissioners this weekend, it appears likely that the church will not invest its own assets but will instead try to harness Welby’s convening power to create a rescue consortium.

At one point Wonga customers were charged interest rates as high as 5,853% per annum, but the rates were capped by ministers in 2015 and now stand at about 1,500%.

Welby has repeatedly clashed with Wonga. In 2013 he told the company’s chief executive he wanted to put it out of business by supporting rival community lending schemes.

He told the TUC conference on Wednesday: “I said to the chief executive of Wonga that I wanted credit unions to compete him out of business. Well, he’s gone!”
The 2013 attack misfired when it emerged the church had indirectly staked about £75,000 in Wonga through an investment fund. It sold the stake the following year.

 

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