The head of the Church of England today said he was embarrassed to find out his organisation had invested indirectly in a short-term loan company which he had vowed only days earlier to drive out of business.
The discovery of the investment was a major setback for Archbishop of Canterbury Justin Welby, after he launched a scathing attack on "payday" lenders who charge high interest rates on short-term loans that are typically repaid when borrowers receive their wages.
But the former oil executive and a member of Britain's Banking Standards Commission said he would push ahead with his campaign to compete with, and eventually render obsolete, a business he labels "morally wrong".
Archbishop Welby’s attack on companies like Wonga, which this month lifted the annual interest rate on its loans to 5,853 per cent, has gained widespread support among Britons who say the lenders are preying on poorer families already mired in debt.
"It shouldn't happen, it's very embarrassing, but these things do happen and we have to find out why, and make sure it doesn't happen again," Archbishop Welby, head of the world's 80 million Anglicans, told BBC radio when asked about the investment.
His comments came after the Financial Times reported that the Church’s pension fund, worth £5 billion, indirectly invested in a company that led Wonga’s 2009 fundraising.
The Church has since said that the amount it invested indirectly in Wonga was £75,000.
Archbishop Welby nonetheless defended his stance on an industry that has flourished during a time of austerity in Britain, when government spending cuts and falling real-term wages have squeezed families’ ability to make ends meet.
“I’ve seen it, I’ve lived in these areas and worked in them. I’ve had staff who’ve got caught up in it and had to be helped, and had their lives destroyed by it. This is something that really matters to me,” he added.
The row over Wonga and its competitors has gone beyond the Church of England. In June, English soccer club Bolton dropped plans for a shirt sponsorship deal with short-term loan company QuickQuid after fierce protests from fans and politicians.
And Newcastle United player Papiss Cisse initially refused to wear a shirt showing the Wonga logo saying it would offend his Muslim faith before backing down yesterday.
The leader of the Anglican Church taking a moral stance on loan companies and their impact on the poor also echoes Pope Francis's attack on the rich and social inequality during a visit to the slums of Brazil this week.
Wonga hit back today, taking out a large advertisement in the Daily Telegraph newspaper entitled “Wonga’s Ten Commitments”.
The final entry, “We always welcome competition”, was an apparent reference to Archbishop Welby’s plans to create an alternative to payday lenders by offering church resources to help traditional credit unions offer deposit accounts and low-interest loans.
Reuters