Somerset community bankers welcome support from Archbishop of Canterbury…
Director Paul Urch said a triple challenge from the Government, church and financial authorities determined to steer struggling borrowers away from the payday loans treadmill will encourage people to track down more reasonable sources of finance.
He said: “The payday loan bubble might not have burst, but it’s being squeezed from all sides.
“The fact the House of Commons and House of Lords, a clutch of major financial institutions and now the Church has come out against the sector suggests the writing is very much on the wall for the payday loan as we know it.”
He said mounting pressure on the £2bn payday loan sector – where interest rates can hit a punishing 4,214 per cent APR – could benefit the UK’s 500 credit unions.
“Somerset Savings and Loans has seen its membership rise by more than 150 per cent since we carried out a major re-launch earlier this year.”
Paul Urch said the unusually robust criticism from the Church of England could provide a further tipping point.
“The Archbishop of Canterbury has launched an all-out attack on the payday loan sector, promising to support credit unions at the hyper-local level.
“His announcement follows hard on the heels of a crackdown on advertising announced by the Financial Conduct Authority and the Office of Fair Trading referring the payday loans sector to the Competition Commission.
“When you factor in recent announcements from the House of Lords and leading local authorities regarding some of the ruinous rates being charged by some payday loan companies, it’s clear the whole sector has been knocked sideways.
“Hopefully the barrage of bad publicity will encourage people to think twice about stepping on to the pay day loan treadmill.
“The concept of the credit union movement is to help the community pooling its savings to lend to its own members. Any profits being made by such lending returning as dividends to its savers. It’s simple in concept but regulated and controlled far more rigorously than the payday lender as we have to operate with a cap on our lending rates.”
Archbishop of Canterbury The Most Rev Justin Welby brought up the big guns during a face to face meeting with Wonga boss Errol Damelin.
He said the church would be throwing open church halls and buildings and offering their expertise to ensure credit unions were fully engaged in their communities.
Archbishop Welby – a former financier – has previously lobbied for a cap on the high interest rates charged by loan companies.
Paul Urch concluded: “The credit union is a way for people to break out of the payday loan cycle by forming a partnership where they can borrow money over a longer period at reasonable interest rates.”
Membership of Portishead based-Somerset Savings and Loans is available to anyone living or working in North Somerset, Bath & North East Somerset or the County of Somerset.
As a Credit Union Somerset Savings and Loans is regulated by the Financial Conduct Authority. It is also a member of the Financial Services Compensation and Ombudsman schemes. Savings are secured under Financial Services Compensation Scheme up to £85,000.
See the website www.somersetsavingsandloans.
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