Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

Has the CoE got it Wong(a)?

So the Archbishop of Canterbury wants to see the usurious money lenders competed to death. Good?

So the Church of England apparently is an indirect investor in Wonga. Bad?

Well not really

For the Archbishop to attack the likes of Wonga (payday lenders) and say that he wants them competed out of existence must be welcomed as a concern for the poor.

That he wants to do it by trying to encourage credit unions is admirable; let’s see the implementation; it may be difficult.  For some reason the Government seems reluctant to support credit unions – they probably smell a bit communitarian.

Some people are criticizing him for doing this (e.g. on tonight’s 26 July 2013 Channel 4 News) saying that they have never had problems with Wonga.  Let’s see:

Type of Business Apr
Pay-day Lenders For-Profit 5853.00%
Credit Union Not for Profit 26.80%

(ref BBC News Website 26 July 2013 What are credit unions?)

So choices (assume Washing machine needs replacing – cost £250):

  1. Payday: £250 will cost £332.15 in 30 days time (Wonga Example)
  2. Credit Union: will cost £256.25 paid back over 6 monthly instalments (NCUL Example)
  3. Do without for a month (hand wash clothes in the bath, use a launderette) and at the end of a month take that £332.15 that you would have given to Wonga, spend £250 on the new washer and laugh all the way to the bank with £82.15 which you have not given to Wonga.

The Archbishop has to be right and those who believe in Wonga etc. either are totally in trawl to instant gratification (Credit Unions do like to know you as a saver for a few weeks beforehand) or are ignorant of the alternatives.

So should he be embarrassed that the FT has revealed that the Church has invested in a fund that has invested in Wonga?  (ref: BBC News Website 26 July 2013 Wonga row: Archbishop of Canterbury ’embarrassed’ over Church funds – FT citation is behind a pay wall).  (“The amount of Church money indirectly invested in Wonga was about £75,000 out of investments totalling £5.5bn”) Well, yes he can briefly blush, but it is indirect investment and that illustrates the difficulty in:

  • investing ethically (e.g. fair trade, fair treatment of employees, environmental performance, minimal exposure to: alcohol, tobacco, weapons, pornography, high interest lending, gambling, etc. etc.)
  • investing indirectly through funds such as “pooled investment vehicles”

Many of us have some form of pension – do we know how it is invested?  Some of us may have invested in “Ethical Funds” – do we know, understand and totally agree with the ethical stance of the Fund manager? When we eat out in a restaurant are we happy with the working conditions of its staff and the sourcing and treatment of all the ingredients?

With all “Funds” you need to ask whether you understand the fund (for instance, does it use derivatives? if so do you know how and why?) – if you don’t, perhaps you should not be investing in it?

I am a little surprised that “Church investment managers “didn’t pick up” that they had put funds in a “pooled investment vehicle” which, through its investments, had bought into Wonga.” I would have expected them to realise that “pooled investment vehicles” are practically impossible to “ethically” monitor.

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