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Archbishop calls on parishioners to invest in credit unions

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Invest in credit unions to help families in desperate financial need, the Archbishop of Wales urged church members today (WED).

If everyone put just £10 or £20 a month into a credit union account they would no longer be seen as “poor people’s banks” and the market for pay day loan companies would be stifled, Dr Morgan said.

He made the appeal at the start of the two-day meeting of the Governing Body of the Church in Wales at the University of Wales Trinity Saint David in Lampeter, and also called for wider public debate on debt and lending.

The Archbishop, who has been a member of a credit union for many years, said,

“We can only remove the market for pay day loans if an alternative is available to lend to people at a reasonable rate and this is where credit unions can play a vital part.  Sadly, credit unions are not part of the fabric of British society as they are in Ireland, Australia, America and Canada.  In this country, they are seen as something that exists for poor people.  In fact, of course, if we all paid money into credit unions, say £10 or £20 a month, this would remove the image of them being poor people’s banks.  This would not be a gift on our part.  We would get a half percent return on our investment, which is far more than you get in the current accounts of most banks at the present time.  More importantly, money could be lent at reasonable interest rates, to people who desperately need it.  Likewise, if we too fell on hard times, we could borrow.”

Dr Morgan also announced that he was in talks with credit unions to see what else church members could do to support them and help those in need.

He said, “This Church, along with other churches at the minute, runs youth clubs, visits the elderly, provides food and shelter for the homeless, and raises money for the poorest parts of our world. Becoming involved in Credit Unions might be a further way of helping families in desperate financial circumstances, to access loans at more tolerable interest rates, and help transform lives.”

The Archbishop reminded members that the Church in Wales, which has an ethical investment policy, gave an annual grant of £15,000 to part-fund a credit union official and to provide pump prime funding for that post from 1999 – 2003. And he acknowledged that some parishes have been involved in the work of credit unions.

Dr Morgan also called for further public debate on debt and lending, highlighting a conference on ethical investment at Cardiff University on October 26 organised by the Church in partnership with others.

He said, “We need further debates in our society about money lending, debt, usury and economic justice – all of which are discussed in depth in our Scriptures. Can it be right, for example, that 30 years ago whereas the Chief Executives of large companies used to earn twenty times more than their lowest employee, they now earn two hundred and eighty times the lowest salary? The gap between rich and poor in our society therefore becomes wider and wider.”

The Archbishop’s full speech follows.

Pre-presidential talk – GB – September 2013

Archesgob Barry Morgan/Archbishop of Wales, Dr Barry Morgan

You all will have received a copy of the Church in Wales’ Ethical Investment Policy Statement on page 24 of the RB Report and you will also have received information about Credit Unions.  The Ethical Investment Policy was endorsed by this Governing Body in 2010 and I wanted these documents circulated because ethical investment and credit unions have been much in the news recently.

Though our Ethical Investment Policy is similar to the Church of England’s, we set our own criteria and thresholds.  You will see that the policy tries to strike a positive rather than a negative note by investing in companies which promote everything that build up creative human communities.  We also try to invest in companies that trade fairly and wish to avoid companies in direct contradiction with our aims as a church – companies which exploit and demean people.  This policy and our holdings are regularly screened by our two fund management companies who report regularly to our Provincial Ethical Investment Committee chaired by the Bishop of Swansea & Brecon.

You will be pleased to know that our fund managers have confirmed that we have no direct holdings in companies engaged in doorstep lending, pay day loans or pawn broking,  and checks are being made with managers of third-party funds in which we have holdings to see if the same applies.  However, because of the size and complexity of some of the company structures with which they deal, it is impossible to state with absolute certainty that there are no links via third parties with such companies.  Our position is and our fund managers are advised that we would never knowingly invest in them.  This matter is on the agenda of the forthcoming meeting of the Ethical Investment Committee scheduled for October 24th.

Now all of us have seen the adverts of pay day loans on television.  They make them sound enormously attractive because they are so easy to obtain.  You just ring up and you can have your loan within 15 minutes.  One million pounds in payday loans will be made available to Blaenau Gwent – one of the poorest parts of the country – in the next year.  The interest rates, of course, are horrendous, over 5,000%, and these are in existence because lenders know that not all the original capital can be repaid because the compound interest is so high.  Nevertheless, pay day companies make a lot of money because of these high interest rates.  They lend money short term at high interest and they know that the people who borrow will default on other creditors.  The fact is, of course, that people are often desperate for the basic necessities of life since wages are not increasing whilst the cost of everything increases.

We can only remove the market for pay day loans if an alternative is available to lend to people at a reasonable interest rate and this is where credit unions can play a vital part.  Sadly, credit unions are not part of the fabric of British society as they are in Ireland, Australia, America and Canada.  In this country, they are seen as something that exists for poor people.  In fact, of course, if we all paid money into credit unions, say £10 or £20 a month, this would remove the image of them being poor people’s banks.  This would not be a gift on our part.  We would get a half percent return on our investment, which is far more than you get in the current accounts of most banks at the present time.  More importantly, money could be lent at reasonable interest rates, to people who desperately need it.  Likewise, if we too fell on hard times, we could borrow.

Credit Unions are savings and loans co-operatives, authorised and regulated by the FSA and covered by the Financial Services Compensation Scheme.

I would like us, as members of the Church in Wales who are not already doing so, to support their local credit unions by investing money in them.  I have been a member of one for years.  Some of you will recall that from 1999 – 2003 we gave an annual grant of £15,000 at the request of this Governing Body, to part-fund a credit union official and to provide pump prime funding for that post and I know that some parishes have been involved in the work of credit unions.

At the moment, I am also talking to various Credit Unions and to the Chief Executive of Wales Council for Voluntary Action, to see how else the members of the Church in Wales individually, and perhaps corporately, can become involved in this movement.

Credit Unions have been called instruments of financial communion because they foster community and make it clear that ultimately we are all responsible for one another.  It is a fact, shown by recent research, that 90% of church congregations undertake some kind of voluntary activity as compared to 54% of the population as a whole.  Our track record therefore is good.  This church, along with other churches at the minute, run youth clubs, visit the elderly, provide food and shelter for the homeless, and raise money for the poorest parts of our world.  Becoming involved in Credit Unions might be a further way of helping families in desperate financial circumstances, to access loans at more tolerable interest rates, and help transform lives.

The Church in Wales, in partnership with others, is organising a conference on ethical investment at Cardiff University on October 26th.  Details are on the website under “Events”.  Creating credit unions will not, of course, end poverty as Bishop Peter Selby pointed out in a recent article in The Church Times.  We need further debates in our society about money lending, debt, usury and economic justice – all of which are discussed in depth in our Scriptures.  Can it be right, for example, that 30 years ago whereas the Chief Executives of large companies used to earn twenty times more than their lowest employee, they now earn two hundred and eighty times the lowest salary?  The gap between rich and poor in our society therefore becomes wider and wider.

In the meantime, we should do all that we can to help whom we can, where we can and when we can.