July 26 - The Church of England has vowed to take on payday lenders like Wonga – criticising them for trapping borrowers in a cycle of debt. But in an embarrassing turn it’s emerged the Church’s pension fund invested in a key Wonga fundraiser. Ciara Sutton looks at whether the church can make a difference to the industry.
The Church of England is on a mission. And not the one you might be thinking. It's making an increasingly vocal stand on the need for responsible practice in the payday lending industry, which has been criticised for trapping borrowers in a cycle of debt. The church would like to put lenders like Wonga out of business. But now the church had to make the embarrassing admission that its pension fund invests in Accel Partners, one of the firms that led fundraising in 2009 for Wonga. Justin Welby is the Archbishop of Canterbury. (SOUNDBITE)(English) ARCHBISHOP OF CATERBURY JUSTIN WELBY SAYING: "Seventy-five thousand pounds some years ago was invested very indirectly in, out of a portfolio of around 3.5 billion, and ended up invested in Wonga. It shouldn't have happened." The church says it was unaware of the inconsistency and will investigate. Despite the revelation, it's putting its money where its mouth is - and is planning to launch a not-for-profit cooperative, offering deposit accounts and low interest loans. Its endowment fund is reportedly backing a bid for more than 300 Royal Bank of Scotland Branches, as part of a consortium of investors. The CofE has been investing for years - but it's thought this is the first time the fund is bidding directly into a bank deal. So could it actually make a difference? (SOUNDBITE) (English) IG MARKET COMMENTATOR, BRENDA KELLY, SAYING: "Well if the Church can't do it then who can? I think in some respects the banking sector both here and I suppose globally, has done itself some serious reputational damage over the last few years. And it continues to do so in regards to Libor rigging, and even down to the RBS news, in respect to those trade that went through that weren't actually reported. So I think it is about forcing the banks' hands to become a little bit more transparent and ultimately do the right thing." The concept of "ethical investment" from the Church is causing quite a stir. A hot topic on Twitter, theologians say there's room for the Church to play a role. But others like Simon Maughan from Olivetree Securities say the bid is "just another commercial investment". (SOUNDBITE) (ENGLISH) SIMON MAUGHAN, GLOBAL FINANCIALS STRATEGIST, OLIVETREE SECURITIES, SAYING: "The reality is, this is an investment fund, it just so happens to be a Church investment fund. They're after it for hard dollar returns. They're not going to be sitting there thinking about who gets a credit card, or whose mortgage gets foreclosed on. They're going to simply going to want to see that bank make money and grow its business." It's not yet a done deal - there are reportedly two other rivals also seeking to buy the RBS branches. And while the move could give the Church a platform to preach higher standards of conduct, it would take a miracle to overhaul the entire sector overnight.