Money and Morality

Well, I had planned to write a post about the morality of money – specifically how the Church of England is taking on Wonga to provide Credit unions for people.

Checking online for facts this morning, I find out that actually the CoE has invested in Wonga and the Credit Unions are only for the clergy and church staff BBC News here.. So, I am going to write what I had planned to and then comment on this at the end of the piece.

First of all, I want to say that I think Wonga and its ilk are unethical service providers who prey on the poor, ill-educated and the desperate. They charge a ‘representative APR’ of 5853% (from the Wonga site today) if the loans are not paid back in full at the end of the credit term – usually a month.

It is desperately easy for people to end up in a horrible debt cycle – over 5000%!. If someone needs to borrow £400 (the highest amount you can borrow) right now, even if they only borrow for 5 days, they have to pay back £425.78, 45 days and it goes up to £587.98. The online calculator doesn’t show what it will be if you go over that, but it will not be pretty…

But, they claim they are only a short term loan provider. But, I say, if someone desperately needs £400 now, will they be able to find the extra £25 after 5 day? I am guessing not.

A couple of years ago I was teaching on BTEC Level 3 (16 year olds) Performing Arts on the Business module. It was the first lesson on funding and I like to teach by getting the students to share what they know before telling them the facts. We discussed ways of raising funding, someone said that Wonga was a good idea. I was horrified.

After a short discussion it became apparent that they did not understand about APR, or interest rates, the difference between credit and debit cards. I threw away my lesson plan and did an improvised session on money management. Most of them had been put off by the percentage sign – so I taught about percentages as well. I could not believe that they had not been taught these things. I started to think, my parents had taught me all of that. I had to save for my first car, so I started working at 14 and saved like crazy – I lived in the middle of nowhere (no pavements, so street lights and no public transport) so a car was really important. That taught me a lot about money.

But then I started to think that the chances are if these students didn’t understand there was a high chance that their parents didn’t either.

So, the chances are that this is a fact which is happening in my area of Thurrock – which is where I teach, work and live there are people struggling to repay these disgusting loans. This is borne out by the fact that in Grays, there is (off the top of my head) 4 pawn shops. Let’s not even get into the topic of the gambling shops here.  I truly believe these payday loan companies are parasites and unethical.

I was delighted yesterday when I heard that the Church of England was taking a stand on this, the Archbishop of Canterbury is challenging them, and not only verbally, but providing a practical solution. I am not Christian, but I do believe the Church of England has a duty to challenge things like this and more importantly to provide a solution. In my area the Church, through Transformation Thurrock and other groups is active in providing Food Banks, as well as a Bar ‘n’ Bus, to help engage disaffected youth and provide somewhere for them to hang out. This is laudable and how it should be, rather than sitting in its ivory tower preaching good things without reaching out.

I am very disappointed to hear that the Credit Unions are only going to be for its staff and even more so that it has invested in Wonga. I hope that there will be a full investigation into this and it will provide a catalyst for the investment team to only invest in ethical options.

There are a lot of unfashionable words in this post – duty, ethics, morals, Church, but I do believe that in business it is important to act ethically, as it is in life. I realise this means I am highly unlikely ever to rich, but I am fine about that, I would rather be ethical than have lots of money. I also realise that many people would say that you shouldn’t talk about this sort of thing on a work blog, but it is something I feel strongly about (as you can probably see in the length of this post) and I wanted to share my thoughts.

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