The Association of Christian Financial Advisers (ACFA) is welcoming Monday's announcement by the Chancellor of a cap on payday loans. This follows a long campaign by ACFA and others to prevent loan sharks preying on those hardest hit by the recession.
"We are delighted the government has finally heeded calls to protect the poor and end this culture of exploitation," said ACFA spokesman Arwyn Bailey. "What must happen now is a fair cap must be set on interest rates and credit charges across the board."
The level of that interest rate cap has yet to be announced. The government is introducing controls in the Banking Reform Bill, which is currently going through parliament. The new law will allow the regulator, the Financial Conduct Authority, to limit loan charges and interest rates which can be as high as 5000 per cent per annum.
ACFA says the legislation will need to be tightly worded to prevent payday lenders from piling on arrangement fees. It must also mandate lenders to be certain the borrower can afford to repay the loan.
"A fair model must also now be set to make sure interest rates don¹t get out of hand in the future," said Arwyn Bailey. "The Chancellor would do well to look at examples from Australia and Japan."
ACFA is also welcoming calls by the Labour Party to give new powers for councils to halt the spread of payday lending shops. And ACFA is calling for action to encourage Credit Unions, which offer lending at fair and manageable rates.
In 2011, ACFA wrote to the Chancellor asking for interest on personal debt to be limited to the same level charged by Credit Unions, with a maximum APR of 15 per cent.
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, see: