Julian Knight: Payday loans need regulation, not just divine intervention

As the Archbishop of Canterbury says, credit unions aren't yet ready to step into the breach

I woke up the other morning to what I thought was news that the Church of England had finally decided to grow a pair. Justin Welby, the new Archbishop of Canterbury and a former finance man, was, said Sky News, stating that he planned to put the payday lenders out of existence.

However, the reality of the comments was not quite in line with the reporting. What the Archbishop said was that the Church was looking to "compete" with the payday lenders, not literally – or else my Sunday morning Eucharist would take on an entirely different character – but figuratively. The Church would like to encourage credit unions and see its messages combating the culture of payday.

The Archbishop was expressing something I have heard from people of faith in the inner cities in recent months. Put simply, they see payday lenders as highly destructive to their communities. Funded often by big international companies (and embarrassingly the CoE pension fun), they have plonked themselves on the high street – often near bookmakers and pubs – and spread their tentacles into the community from there.

One vicar I know has told his parishioners that payday lending is simply "evil", preying on the poor, mentally unwell and drunk. He has more than a point.

Dig beneath the headlines about the Archbishop's comment and a very interesting point emerges – one that I think exposes the difficulties faced by opponents of payday loans. The Archbishop said: "We've got to have credit unions that are both engaged in their communities and much more professional, and the final thing is people have got to know ... it is a decade-long process."

That's very true. We do need strong credit unions, but many of these mutuals went to the wall in the aftermath of the financial crisis and this highlighted the problem that many are amateurishly run. It's a sector that I don't think is capable of combating payday lenders, even within the 10-year timeframe set out by the Archbishop.

In some ways, saying we need stronger credit unions is a bit of a cop-out. If we really want to tackle payday then what we need is stricter regulation of the sector itself – an end to rollover loans and a cap on interest rates, for starters – and banks being compelled to offer fair, transparent financial services to low-income groups rather than leaving them out in the cold. The truth is that payday lenders are there for a reason: the service that they offer, short-term lending, is needed – just not in the way it is being delivered at present.

So good on the Archbishop for raising this and putting across the idea that there is a moral dimension at play here – a social issue requiring urgent measures.

We can't wait a decade for the credit unions to get their act together.

Suggested Topics
News
people
News
people
News
peopleStella McCartney apologises over controversial Instagram picture
Life and Style
Laid bare: the Good2Go app ensures people have a chance to make their intentions clear about having sex
techCould Good2Go end disputes about sexual consent - without being a passion-killer?
PROMOTED VIDEO
Arts and Entertainment
Richard Burr remains the baker to beat on the Great British Bake Off
tvRichard remains the baker to beat as Chetna begins to flake
News
i100
Sport
footballArsenal 4 Galatasaray 1: Wenger celebrates 18th anniversary in style
Arts and Entertainment
Amazon has added a cautionary warning to Tom and Jerry cartoons on its streaming service
tv
News
people
News
The village was originally named Llansanffraid-ym-Mechain after the Celtic female Saint Brigit, but the name was changed 150 years ago to Llansantffraid – a decision which suggests the incorrect gender of the saint
newsA Welsh town has changed its name - and a prize if you can notice how
Arts and Entertainment
Kristen Scott Thomas in Electra at the Old Vic
theatreReview: Kristin Scott Thomas is magnificent in a five-star performance of ‘Electra’
News
Destructive discourse: Jewish boys look at anti-Semitic graffiti sprayed on to the walls of the synagogue in March 2006, near Tel Aviv
peopleAt the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
Life and Style
Couples who boast about their relationship have been condemned as the most annoying Facebook users
tech
Arts and Entertainment
Hayley Williams performs with Paramore in New York
musicParamore singer says 'Steal Your Girl' is itself stolen from a New Found Glory hit
News
i100
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Trainee Recruitment Consultant - Birmingham - Real Staffing

    £18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

    Trust Accountant - Kent

    NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

    Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

    £18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

    Law Costs

    Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

    Day In a Page

    Italian couples fake UK divorce scam on an ‘industrial scale’

    Welcome to Maidenhead, the divorce capital of... Italy

    A look at the the legal tourists who exploited our liberal dissolution rules
    Time to stop running: At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity

    Time to stop running

    At the start of Yom Kippur and with anti-Semitism flourishing, one Jew can no longer ignore his identity
    Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

    Tom and Jerry cartoons now carry a 'racial prejudice' warning on Amazon

    The vintage series has often been criticised for racial stereotyping
    An app for the amorous: Could Good2Go end disputes about sexual consent - without being a passion-killer?

    An app for the amorous

    Could Good2Go end disputes about sexual consent - without being a passion-killer?
    Llansanffraid is now Llansantffraid. Welsh town changes its name, but can you spot the difference?

    Llansanffraid is now Llansantffraid

    Welsh town changes its name, but can you spot the difference?
    Charlotte Riley: At the peak of her powers

    Charlotte Riley: At the peak of her powers

    After a few early missteps with Chekhov, her acting career has taken her to Hollywood. Next up is a role in the BBC’s gangster drama ‘Peaky Blinders’
    She's having a laugh: Britain's female comedians have never had it so good

    She's having a laugh

    Britain's female comedians have never had it so good, says stand-up Natalie Haynes
    Sistine Chapel to ‘sing’ with new LED lights designed to bring Michelangelo’s masterpiece out of the shadows

    Let there be light

    Sistine Chapel to ‘sing’ with new LEDs designed to bring Michelangelo’s masterpiece out of the shadows
    Great British Bake Off, semi-final, review: Richard remains the baker to beat

    Tensions rise in Bake Off's pastry week

    Richard remains the baker to beat as Chetna begins to flake
    Paris Fashion Week, spring/summer 2015: Time travel fashion at Louis Vuitton in Paris

    A look to the future

    It's time travel fashion at Louis Vuitton in Paris
    The 10 best bedspreads

    The 10 best bedspreads

    Before you up the tog count on your duvet, add an extra layer and a room-changing piece to your bed this autumn
    Arsenal vs Galatasaray: Five things we learnt from the Emirates

    Arsenal vs Galatasaray

    Five things we learnt from the Gunners' Champions League victory at the Emirates
    Stuart Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

    Lancaster’s long-term deal makes sense – a rarity for a decision taken by the RFU

    This deal gives England a head-start to prepare for 2019 World Cup, says Chris Hewett
    Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

    The children orphaned by Ebola...

    ... then rejected by surviving relatives over fear of infection
    Pride: Are censors pandering to homophobia?

    Are censors pandering to homophobia?

    US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence