Archbishop of Canterbury to lead effort to buy £400m Wonga debt

The Archbishop of Canterbury is to lead a not-for-profit attempt to buy the £400m Wonga loan book following the company’s collapse, it has been reported.

Justin Welby will meet potential investors and charities to discuss bidding for the debts in an attempt to protect some 200,000 borrowers who may be forced to pay back loans at sky-high rates if a commercial lending firm takes the business.

Under early proposals, the consortium would seek to reduce what borrowers owed by scraping – or vastly bringing down – the interest, The Guardian reports.

The action comes after the Labour MP Frank Field suggested the Church of England use some of its £7bn assets to take over the loan book.

As chair of the Commons work and pensions committee, he has asked Wonga’s administrators to delay any sale until the church had considered if it could act.

He said the archbishop showed enthusiasm for the idea and had discussed the proposal with church commissioners – although it had been decided it would be preferable if the loan book was bought by a collection of investors, rather than by the church alone.

If successful, the group may then develop into a low-cost payday lender, charging nominal rates for short-term advances in an attempt to reduce the business of high-interest lenders and loan sharks.

The archbishop had repeatedly clashed with Wonga before it collapsed suddenly in August. In 2013 he told the company’s chief executive he wanted to put it out of business by supporting rival community lending schemes.

He told the TUC conference on Wednesday: “I said to the chief executive of Wonga that I wanted credit unions to compete him out of business. Well, he’s gone!”

A Lambeth Palace spokesman said: “We are reflecting on the letter from Frank Field to help determine what may or may not be possible in the months ahead.”

Administrators Grant Thornton said it would consider all proposals. A spokesperson said: “The administrators are more than willing to consider all such interest in accordance with their statutory obligations, while working closely with the Financial Conduct Authority to conduct an orderly wind down of the business and supporting customers where possible during this period.”