Church set to compete with payday loans

AHEAD of today’s payday loans summit in Whitehall, the Archbishop of Canterbury has said that the Church of England intends to create a credit union for clergy members, and wants to encourage congregations to take an active role in the development of local credit unions.

The government already proposed earlier this year to inject £38m into credit unions.

Payday loans companies will today have to justify their business tactics, as the political crackdown on the industry continues.

Minister Jo Swinson will host a meeting with industry representatives to discuss potential regulations to protect borrowers from misleading information and high charges.

The consumer group Which? has asked for a cap on charges, roll-overs, and more transparent advertising ahead of today’s meeting. The group has previously described the industry as “toxic” and criticised lenders’ credit checks on customers.

The Consumer Finance Association, which represents major short-term lenders in the UK, acknowledged that there are sections of the industry that need to “clean up their act” and admitted borrowers could benefit from “additional protection from less reputable lenders”.

“Responsible payday lenders, however, operate to high standards and already have in place many of the measures that Which? is calling for,” the organisation added.

The Office of Fair Trading (OFT) last week referred the industry to the Competition Commission who will conduct an in-depth investigation. The role of the Financial Conduct Authority (FCA), which will replace the OFT as the industry’s regulator next April, will also be discussed at the meeting.