The Church Commissioners, who handle investments for the Church of England, have pulled out of talks around buying the loan book of payday lender Wonga.

Wonga, which specialised in high-cost short-term loans, collapsed last month following a surge in compensation claims and former Labour MP Frank Field suggested the Church should consider involvement in a buyout to ensure its loans do not pass to another high-cost lender.

However, the Archbishop of Canterbury said today the Church Commissioners had decided not to take part in any buyout. According to the Guardian, they are understood to have argued that they lacked expertise to properly value the loan book and were concerned about the legal implications of the need to write off certain loans.

Justin Welby had been in conversation with potential investors this week regarding the formation of a consortium with a view to creating an ethical payday lender, the Guardian reports.

The church said in a statement: 'The church understands that confidential approaches may now be made by those interested parties to the administrators of Wonga's UK loan book. The Church of England will not be party to continuing discussions given their commercially sensitive nature.'

Welby said: 'My chief concern has been to ensure that the poor and vulnerable are as well protected as possible following the collapse of Wonga's UK business.

'I fully support and respect the decision of the church commissioners not to participate in a potential buy out. They have given this option close attention and I thank them for their time, advice and consideration.'

He continued: 'I will be continuing to examine ways to make affordable credit, debt advice and support more widely available and convening interested parties at Lambeth Palace. If we make the economy fairer for all, we will also make it stronger. When prosperity and justice go hand in hand, every part of society benefits.'