Welby hits out at payday loan firms
Filed under: Loans
The Most Rev Justin Welby hit out at the "usurious" rates of interest charged and said the Church should play its part in the development of alternatives such as credit unions.
He urged ministers to provide the right regulatory environment for more flexible provision to those needing short-term loans and the aim, he said, was for viable alternatives to "compete the high-rate lenders out of existence".
In a Lords debate on the payday lending industry, the Archbishop, who is a member of the Commission on Banking Standards, said payday lending was a problem becoming too big to ignore. Of calls to cap the interest rates charged by payday lenders, he said: "We need to look at reasonable limits that cut out legal usury from our high streets."
The Archbishop hoped a "thriving alternative credit movement will one day mean that payday lenders simply aren't necessary".
Labour's Lord Kennedy of Southwark attacked the "outrageous" rates of interest charged by payday lenders, warning: "Rip-off Britain is alive and well." He said more effective regulation was needed and urged a summit at 10 Downing Street to tackle the issue.
For the Opposition, Lord Mitchell blamed some payday lenders for causing "misery and hopelessness" by lending to those who could not afford to repay and backed the call for alternatives such as expanded credit unions. He accused ministers of a U-turn over the capping of interest rates, claiming the Government no longer seemed to care about the issue.
Business, innovation and skills minister Viscount Younger of Leckie insisted the Government took the matter extremely seriously and that people should be free to borrow, but must make responsible decisions on their finances.
Lord Younger said lenders were not always conducting adequate assessments of borrowers' ability to afford the loan and there was "poor compliance" with voluntary codes implemented last November.
© 2013 Press Association