THE Archbishop of Canterbury has welcomed an announcement by the
Office of Fair Trading (OFT) that it will take tough action against
The OFT announced on Tuesday that the "leading 50 payday
lenders" would be given "12 weeks to change their business
practices or risk losing their licenses". It said that it had
uncovered "widespread irresponsible lending and failure to comply
with the standards required of them".
Archbishop Welby said on Tuesday: "I warmly welcome the action
taken by the OFT, which will contribute to improved access to
affordable finance across England. In the longer term, in order to
ensure that all members of society have access to affordable credit
and other financial services, the development of credit unions and
other forms of local finance is essential."
Speaking in the House of Lords last year, when he was Bishop of
Durham, Archbishop Welby had described the rates charged by
payday-loan companies as "clearly usurious" (
News, 30 November 2012).
The director of the Church of England's Mission and Public
Affairs team, the Revd Dr Malcolm Brown, praised the OFT's
announcement on Tuesday. It "clearly shows that there are
deep-seated problems with the way the whole payday-loan market is
operating at the moment. Many borrowers are already in a
financially precarious position, and, all too often, payday loans
are making their situation worse."
The Church's investment bodies do not invest in payday-loan
companies and other high street lenders, a statement from Church
House said, "because of concerns about the exploitation of
vulnerable and low-income customers".
The Association of Christian Financial Advisers (ACFA) issued a
statement on Wednesday calling for a maximum interest rate, and a
ban on roll-over credit "to protect the poor and vulnerable from
Aidan Vaughan, a spokesman for the ACFA, called for codes of
good practice, "including guideline interest rates, which should
then be clearly displayed on any advertising, to stop manipulation
and exploitation of low-income households".
The OFT said: "Too many people are granted loans they cannot
afford to repay, and it would appear that payday lenders' revenues
are heavily reliant on those customers who fail to repay their
original loan in full on time."
Abbie Shelton, of the Association of British Credit Unions
Limited (ABCUL) said: "It is very unlikely that very short-term
loans of a few weeks will be the right solution for most people,
because this only stores up problems for later. If a loan is
needed, spreading repayments over a few months will usually make
"Credit unions can also help people to look at their finances
and get into a savings habit, so that they do not have to rely on a
short-term loan next time they are short of money."