Amazon: Time for the Welby Effect?

If you earn money from a community, you should pay your share of tax to that community. I was in business, and I know that, within limits, its right and proper for people to arrange their tax affairs, and for companies to do so. But when vast companies like Amazon, and other online traders, the new industries, can get away with paying almost nothing in tax, there is something wrong with the tax system. They don’t pay a real living wage, so the tax payer must support their workers with benefits. And having leached off the tax payer once they don’t pay for our defence, for security, for stability, for justice, for health, for equality, for education. Then they complain of an undertrained work force, from the education they have not paid for, and pay almost nothing for apprenticeships. Those are only a fraction of the costs of aggressive tax management.

Mary spoke of the God who gave us Jesus as the one who “has shown strength with his arm;

He has scattered the proud in the thoughts of their hearts.

He has brought down the powerful from their thrones,

And lifted up the lowly;

He has filled the hungry with good things,

And sent the rich away empty”.  

From Justin Welbys speech at the TUC conference yesterday. (Btw, he very cleverly tackled the anti-Semitism debate within Labour too, see if you can spot it)  Welby's comment about doing Wonga out of business in 2013 was followed by a series of revelations and disasters at the company. Amidst an avalanche of complaints, Wonga went into administration a few days ago. 

Biblical prophecy operates on the basis that as the prophet speaks God's message and God's verdict on human institutions, the act of speaking it out helps to bring that verdict into being. It may be my fevered imagination, but it has been downhill for Wonga ever since Welby publicly took them on. 

Amazon has so far remained untouched by every criticism and every revelation about its appalling record in paying tax. Will we see the Welby Effect on Amazon? Lets hope so. 

Wonga: The Welby Effect Part 2

After announcing yesterday that profits had more than halved, another Wonga story this morning. The Financial Conduct Authority has just put up a press release headed with the following announcement:

Wonga has entered into an agreement, known as a voluntary requirement (VREQ), with the Financial Conduct Authority (FCA) that requires it to make significant changes to its business immediately.

Reading between the lines, the FCA says that Wonga aren't doing enough to check people's ability to pay back their payday loans. Roughly 375,000 customers will now be released from punitive debt interest as a result, 330,000 of which have arrears of over a month - for them, the entire debt is being written off. That's 375,000 people who Wonga now admits it shouldn't have lent to in the first place. Their website now acknowledges the 5000%+ annual interest rate that Wonga previously deemed 'irrelevant'. It doesn't look at the moment as though the interest rate is changing, but they will be lending to fewer people.

Wonga made 4.6m loans last year, so the write-off amounts to 8% of the total number of loans in a year, and will cost them £220m. That's more than 5x their declared annual profits from 2013. At this rate Wonga could be out of business before Justin Welby has time to say Amen.

More from the FCA:
“We are determined to drive up standards in the consumer credit market and it is disappointing that some firms still have a way to go to meet our expectations. This should put the rest of the industry on notice – they need to lend affordably and responsibly.

“It is absolutely right that Wonga’s new management team has acted quickly to put things right for their customers after these issues were raised by the FCA.

Effective today, Wonga has introduced new interim lending criteria that should improve customer outcomes.

Wonga's press release in response is mildly worded mea culpa "we recognised that we may not have always made the right lending decisions, and on reflection some of these loans may not have been affordable", i.e. we were bleeding people dry who couldn't afford the repayments and we've finally been had up for it. 

Wonga's publicly stated priorities, after cutting out lending to vulnerable customers, include a plan 'to address the total cost of credit'  Hopefully the next wave of the Welby effect is an end to usurious rates of interest. After that, we need an end to advertising  during childrens TV programmes - the TV watchdogs need to step up to the plate now that the FCA have shown how its done. (you can lobby for that here)

And finally how about a few more stories about credit unions, so that people know there is an ethical alternative to branded debt sellers. 

If you live locally, here's a couple for starters:

Somerset Savings and Loans

Camelot Credit Union

Wonga: The Welby Effect

A plan for the church to develop credit unions has been floated, with Welby proud that the church is “putting our money where our mouth is” in developing an alternative to payday money-lenders. The plan, he says, is to create “credit unions that are both engaged in their communities and are much more professional – and people have got to know about them.”

It will, he adds, be a “decade-long process”, but Welby is ready for the battle with the payday giants. “I’ve met the head of Wonga and I’ve had a very good conversation and I said to him quite bluntly we’re not in the business of trying to legislate you out of existence, we’re trying to compete you out of existence.” He flashes that smile again. “He’s a businessman; he took that well.”

that was an interview in July last year. Since then Wonga has been fingered for sending fake legal letters to 45,000 customers, and made to pay out over £2m in compensation. This morning they've just announced that pre-tax profits for 2013 fell by 53%. At this rate Wonga will be out of business before the CofEs alternative credit union scheme has even got off the ground. Welby 1 Wonga 0.