The Church of England formerly cuts its ties with Wonga - an association that came under scrutiny for the payday lender's extreme interest rates and its practice of sending customers bogus letters. Should investors like the CoE be more discerning in future? Hayley Platt reports.
It's up there with some of most embarrassing sagas for the Church of England. First it preached about the perils of using payday lenders like Wonga. Then it emerged the church had invested around £75,000 in the firm, albeit indirectly. Now, the Church says it's broken off all ties with the high-interest internet lender. But some question why they ever got involved with them in the first place. Joe Rundle is from ETX Capital. SOUNDBITE: Joe Rundle, ETX Capital, saying (English): "I don't think the Church of England should start meddling in lending and making it almost a political and moral case. Obviously, it should make investments with its cash as it seems fit but I think when it's trying to make an investment to make a moral point it's probably not the best basis of an investment." Many payday lenders have been heavily criticised for charging high interest rates. Their loans are designed for tiding people over on a short-term basis. But their short-term loan charges can roll up to an annual rate of almost 6,000 percent. And in 2012 it made a profit of 62.5 million pounds. But after an investigation into unfair debt collection practices, last month Wonga was fined 2.6 million pounds. The question is what have investors learnt from the debacle? SOUNDBITE: Joe Rundle, ETX Capital, saying (English): "I think what the Church of England have done here is made the investment to make the point rather than make the investment based on the ethical reasons behind it and I think that is the wrong way around of approaching investments." The U-turn by the Church comes after its head, the Archbishop of Canterbury Justin Welby, said he wanted to drive Wonga and other payday lenders out of business. He wants to see the church supporting credit unions as an alternative. The Churches' Mutual Credit Union is due to be launched on 1 October.