A DEBT advice centre has given its backing to the Archbishop of Canterbury in the row over payday loan companies.
Jemma McDougall, from the Houghton branch of Christians Against Poverty (Cap), has welcomed the Most Rev Justin Welby’s criticism of the controversial lenders, which often have annual percentage rates running into the thousands.
“I know that Cap welcomes the church’s recognition of the issues that credit can cause for the poor in our nation,” she said.
“We are glad that the Archbishop is taking steps to both publicise and engage with the issue of debt and personal lending in the UK.”
Increasing numbers of people are seeking help and advice about debt with payday loan companies.
Because of the firms’ rates, lenders taking out even a small loan could end up with a massive debt and penalty charges.
“It is important to recognise that payday lending is just one of the many causes of unmanageable debt and the stress and pressure this causes to countless individuals in the UK,” said Jemma.
“However, while there is a clear demand for this type of credit, Cap is concerned at the ease with which individuals can access such credit.
“Often it is the most desperate, many of whom are already in debt, that will turn to this form of credit, providing temporary relief but exacerbating the situation over the long term.
“The rise of payday lending over recent years, in light of the credit crunch, where many more mainstream lenders reduced their lending, should be one of considerable concern for us as a country.”
However, Jemma said urging the needy to use church Credit Unions, which the former Bishop of Durham recommends, was not the answer to all money troubles.
The unions charge lower rates than payday firms and are seen as a more “caring” alternative to banks.
Members are encouraged to save and borrow only what they can repay.
“Credit Unions play a valuable role in society providing help and affordable loans to many in need,” she said.
“For many who are in debt, an additional loan is not the way out.
“In situations such as these, Cap can offer real practical advice through either our debt help service or Cap Money Course.”
Earlier this week, the Archbishop admitted he was “embarrassed” to discover that the Church of England had a stake in payday lender Wonga.
However, he said he would continue to speak up for the poor and had received “overwhelmingly positive” feedback on his comments.