The Archbishop of Wales will meet the minister responsible for tackling poverty in Wales today (Nov 7) for talks on how to combat the rise of payday lenders.
Dr Barry Morgan will meet Communities and Tackling Poverty Minister, Jeff Cuthbert to discuss how to strengthen the credit union movement.
The Minister and the Archbishop share concerns that the growth of payday loans is causing damage to communities across Wales. The Welsh Government has increased support to credit unions as they offer an affordable alternative to high cost payday loan companies.
Ministers have a target of six per cent of the population using their services by 2020 and how to continue the growth of the credit union movement will be part of the talks.
The Welsh Government has increased support for the credit union movement in Wales and earlier this year announced a £1.9 m funding package to increase membership. The money will also help the institutions to develop the services and products they provide for customers so that credit unions become a more visible and widely available source of affordable financial services.
Speaking ahead of the meeting, the Archbishop said, “I am delighted that the Welsh Government is taking positive steps to support credit unions so that people who borrow money from them know that they will not be paying exorbitant rates of interest.
“It is the poorest and most vulnerable members of our society who are targeted by payday loan firms and it is good to know that the Government is doing something concrete and practical to help them.”
Mr Cuthbert said: “We need to do more to warn people of the dangers of payday loan firms that charge sky-high interest rates that can trap people into an escalating circle of debt if they find that they cannot meet the re-payments. With stagnant incomes and a sluggish economy, more and more people are being tempted by these loans simply to get by. We need to ask ourselves if these companies are adequately assessing if people who apply to them can really afford the repayments. Are the interest rates they charge right of fair?
“I know the Archbishop of Wales shares my concerns about payday lenders, but he also shares our enthusiasm for credit unions providing a real alternative. Credit unions offer safe, community based financial services and I want to see more people turning to them. I am delighted we will have this opportunity to discuss how we can work together on these issues.”
In September the Archbishop urged church members to invest in credit unions, as he does himself. He said that would help them shed their image as a “poor people’s bank” and stifle the market for payday loan companies.
Previously, the Church in Wales gave an annual grant of £15,000 to part-fund a credit union official and to provide pump prime funding for that post from 1999 – 2003. Some parishes have been involved in setting up and running credit unions, such as the Gateway Credit Union, based in Pontypool, which was spearheaded by Revd Brian Pippen, now its President.
Notes for editors:
- Credit unions are not-for-profit financial organisations set up for the purpose of ethical savings and borrowing and provide an alternative to traditional banks and high-rate loan providers.
- There are 21 credit unions providing all Wales coverage. As at the end of March 2013, there are 32 credit union offices, with a total of 264 collection points throughout Wales.