The Association of Christian Financial Advisers is supporting calls by MPs to regulate payday loans and cap their interest rates to combat rising poverty and unserviceable debt.
ACFA welcomes calls by David Crausby MP to regulate payday loans, and from Stella Creasey MP to cap payday loan interest rates – which can be as high as 3,000 per cent APR.
To combat rising poverty and debt, ACFA is seeking new regulations requiring lenders to carry out a thorough assessment of the individual’s ability to service their debt before making credit available.
"A London council employee told me the other day that they now see mothers queuing around the block for a food station run by the local authority and charities," says ACFA spokesman Arwyn Bailey. "Having recent personal experience of a close relative committing suicide over debt, I find it incongruous that in a so-called civilised society, we are now witnessing such desperation."
Debt counselling charity Christians Against Poverty last weekend revealed that 40 per cent of 1,500 clients had either attempted suicide, or thought about suicide over the issue of debt.
The union Unite has estimated that people are having to work three days a month just to service debts. A follow-up survey found the average worker needs to borrow upwards of £325.00 per month just to make ends meet. And last week Save the Children announced it is aiming to raise half a million pounds to tackle the rising levels of child poverty within the UK.
"We are seeing desperation and real poverty of a kind not witnessed for perhaps a generation on the streets of our nation," says Arwyn Bailey. "Now is the time for the Government to act boldly, to regulate the loan industry more tightly in line with other financial products, and to cap the interest rates of lenders. Along with this the government must declare a time of jubilee and debt forgiveness."
ACFA is concerned that people are being drawn deeper into debt by lenders who require only a brief conversation or online application before making credit available. ACFA wants to see regulations, along the lines of those for a residential mortgage, that require a lender to view payslips and bank statements and to analyse the level of household income before giving credit.
ACFA is the UK network of Christian financial advisers and related professionals. It aims to be the voice of Christian financial advice and champions best practice in the UK. The ACFA website offers links to Christian financial advisers across the UK: http://www.christianfinancialadvisers.org.uk/