Loans In Church

Loans In Church.

Much publicised across the web and television, the Church of England has finally launched its own credit union with a view to steering people away from expensive payday lenders.

The Archbishop of Canterbury was highly critical last year of payday lending practices and vowed to put them out of business given the high interest rates some charge and getting vulnerable people further into debt.  He promised to launch a competitor that was fairer.  This is exactly what is happening now.

The Church Credit Champions Network (CCCN) will pilot in the dioceses of London, Southwark (Sth London) and Liverpool.

Payday loans, from 1st April, are now regulated by the Financial Conduct Authority (FCA) and as such face much stricter criteria on the fairness, suitability and affordability of short term lending. That said, interest rates are still high with even the FCA proposing to cap maximum charges for credit in January 2015.

Financial Advice in Church?

Already, some Church groups offer financial counselling and the Church of England plans to expand financial advice across the Church network. With regard to any CCCN loans, no money will exchange hands inside a Church.

What is a Credit Union?

It is a mutual organisation owned by its members i.e. savers. Some network members save into the scheme with others borrowing from the scheme at, hopefully, cheaper rates. They are regulated by the FCA and when a credit union fails (which many have), the Financial Services Compensation Scheme may come into play.

Comment

The Church of England promoting responsible lending is a good thing. The more people having access to debt counselling is a good thing. We have to say though that regulators, whether it is the incoming FCA, now responsible for short term credit, or the outgoing Office of Fair Trading who used to issue consumer credit licences, should all have acted quicker to police such a high risk, vulnerable section of the population.