Moves to improve access to affordable credit in Scotland for people on low incomes are to be championed by a new action group led by the Very Rev John Chalmers.
The Principal Clerk to the General Assembly began working with the Carnegie Trust to address this issue during his time as Moderator last year. Now he has been appointed the chairman of a new group which believes people from all walks of life should be able to legitimately borrow money at affordable rates.
Mr Chalmers says the national Affordable Credit Action Group will promote access to "excellent forms of community lending" with the aim of reducing the cost of borrowing, supporting financial inclusion, promoting fairness and greater equality.
"I believe the inequality in our financial system has to change if Scotland is to overcome its wider social problems. Improving access to cheaper, small and short term loans to those who can afford to repay them could improve people's quality of life – particularly those in disadvantaged communities.
There has never been a coherent, nationwide approach to resolving the issue of affordable credit in Scotland. Together we can avoid duplication of efforts, improve sharing of best practice and create new opportunities to tackle the big issues at scale."
The highly respected Group, consisting of representatives from across Scotland's financial industries as well as the third and public sectors, has spent a year analysing financial inequality in Scotland.
Jeremy Peat, the co-Chair of the Affordable Credit Working Group, is a former Chief Economist of RBS and a Visiting Professor at the University of Strathclyde's International Public Policy Institute. He said "Access to credit in Scotland is not a level playing field. Credit is – for a mixture of good and bad reasons – most expensive for those who can least afford it.
"While the regulation of payday loans has reduced the supply of expensive credit, it has done little to affect demand for short term borrowing amongst the poorest members of society or to stimulate alternative sources of supply of credit. A step-change is needed because that demand is not going away."
The group has published a series of 18 recommendations for government and industry to adopt in order to break down some of the barriers they've identified. This includes recommending that a Scottish Government minister is given responsibility for financial inclusion, including affordable credit, as part of their brief.
The Church of Scotland is one of a group of churches which came together to form its own credit union in February 2015. The Churches Mutual Credit Union (CMCU) includes the Kirk, the Church of England, the Methodist Conference, The Scottish Episcopal Church and the Church in Wales. The United Reform Church has also made a formal application after it was welcomed to do so informally.