The Church of Scotland is committed to working with the Church of England to see how a joint Credit Union project can best serve more people across both nations.
A social evil is perpetrated by many payday lenders, but we do recognise that there is a need for many people to access credit at reasonable rates of interest. The interest rates charged by the payday loan companies, which can be in excess of 4000% APR, causes great hardship to many of the poorest in our communities.
The scale of the current problem is apparent when you consider that the Money Advice Trust has reported that last year, they received over 20,000 calls for help with payday loans, a 94% year on year increase.
The Kirk’s concern for the poorest people in our society is expressed in many ways, and this work to promote the mutuality and co-operation in financial services is an extension of that concern.
Church of Scotland congregations have been encouraged to consider ways in which they may be able to support local credit unions. These are member-owned financial co-operatives, operated for the purpose of promoting thrift and providing credit and other financial services to its members at competitive rates.
Practical support that a church may offer could include:
For more information see this leaflet 10 ways your church can get involved with Credit Unions
The Church of Scotland is already working closely with the Church of England on many of these issues. We agree with Justin Welby, the Archbishop of Canterbury, that ethical financial institutions have to be able to compete with payday lenders. Part of that will be enabling credit unions to improve the service that they can offer their members.
However, it’s often forgotten that credit unions have a duty to promote financial education. The Church of Scotland wants to develop financial education programmes so that young people will change the way that they manage their finances. That was one of the clear outcomes of our Economics Commission report “A Right Relationship with Money.”
It’s not just payday lenders that we have in our sights, though. High street banks are next on our list. For more information on credit unions see this leaflet.