Bishop Christopher joined his local credit union as he backed Justin Welby’s campaign against unscrupulous loan companies.

Bishop Christopher at the Fratton branch of Hampshire Credit Union

Our diocese has thrown its weight behind the Archbishop of Canterbury’s campaign against payday loan firms, as it seeks to transform the prospects of the poorest people in this area.

Clergy and diocesan staff across south-east Hampshire and the Isle of Wight will promote credit unions and help those in financial difficulties to find appropriate advice. It’s a direct response to the suggestion by the archbishop that the Church of England might compete firms like Wonga out of existence.

The bishop and diocesan social responsibility adviser Canon Nick Ralph have already joined Hampshire Credit Union themselves. It operates throughout the diocese and has launched a new loan to compete directly with payday loan firms.

Church leaders will hear from a representative of Hampshire Credit Union, and also discover how cuts and changes to benefits have hit the poor, at a Diocesan Synod debate on November 2 on the impact of economic austerity. Bishop Christopher will also address the issue in a lecture at the University of Winchester on October 30, entitled ‘Inequality or injustice? Benefit changes, bedroom tax and public ethics’.

This announcement comes on International Credit Union Day (October 17), which Justin Welby marked by joining photo-sharing website Instagram, with a message urging churches and church leaders to support credit unions. He has written to all clergy, telling them that the one million families who take out payday loans every month can end up in a crippling spiral of debt.

Bishop Christopher, who was also a member of his local credit union when he worked in St Albans Diocese, said: “It’s great that the diocese is responding to the archbishop’s challenge. Expensive loans can be a crippling burden to many in our communities. I hope church communities can be local places of access to the services of the credit union, which I’m delighted to be a member of.”

And Canon Nick Ralph, who is also a canon of Portsmouth Cathedral, said: “Justin Welby importantly pointed out the scandal of companies that offer payday loans online at the click of a button, and then charge huge amounts of interest on those loans. Our clergy know of people who have been caught in that trap and ended up owing vast amounts of money. Meanwhile there are 500 non-profit credit unions around the country, which can help. They just need to be more accessible and better known to those who really need them.

“We’ll be making sure our clergy know about the Hampshire Credit Union, which also works in the Isle of Wight, and other organisations that can offer debt counselling or help with financial management. Then when worshippers meet people who are in a desperate financial situation, they’ll know how to advise them.

“We’d also like to find volunteers from our parishes - and church schools and other denominations - who can act as collectors in their local communities and potentially as trained mentors. Justin Welby said it could take decades, but that a network based on churches could be more professional and more engaged with communities than a firm such as Wonga.

“We also want to campaign against loan sharks and illegal doorstep lenders, as well as call for proper regulation of payday loans. Campaigning against this kind of social injustice is a core part of our Christian calling.”

Credit unions are co-operative organisations owned by their members. Those members are encouraged to save as well as to loan, and interest rates are kept to a minimum. Payday loan companies offer short-term cash until the person’s next payday at high interest rates. Applying for such loans online means giving those firms access to your bank account - meaning they can remove cash sums without warning.

The Church of England has started its campaign by launching its own Churches Mutual Credit Union. It will start next October and is designed for clergy and church staff. Running its own credit union will help the C of E advise others. Canon Antony Macrow-Wood, who is setting it up, is a former chair of the Association of British Credit Unions. He’s one of the speakers at our Diocesan Synod on November 2.

Sam Wilkes-Holmes, operations manager of Hampshire Credit Union, will also speak on this issue. He’ll describe their new C U Right loan, which is available almost immediately, but costs much less than a payday loan, helping to deprive firms such as Wonga of more profitable customers.

Carole Damper, manager of the Roberts Centre in Portsmouth, and Nicola Youern, chief executive of You Trust, will talk during the same debate about the impact of poverty, government cuts and benefit changes on the disadvantaged families they work with.

Anyone who isn’t a member of synod but would like to attend can do so. The debate takes place from 11.30am-1pm, in Cathedral House, behind our cathedral. For more information, see www.portsmouth.anglican.org/creditunions.

CASE STUDY: How credit unions can help

PETE (not his real name) was a salaried professional, a home-owner and a father when he ran into financial problems.

In his early 20s, he had started a new relationship and had a baby with his partner. She stopped work, but they carried on living beyond their means. He ended up owing around £13,000 on six credit cards and three store cards.

“Credit was available left, right and centre, but I wasn’t very wise about money then,” he admitted.

He recovered with his father’s help, but had defaulted on some mortgage and other payments, which affected his credit rating.

When he got married and had three children, he found himself in mortgage arrears again. He needed to borrow £350 quickly for an urgent roof repair three years ago, but banks wouldn’t lend him the money because of his credit history. His only option was a payday loan, which took 15 minutes to organise online.

But it snowballed and within a few months he owed money to three different loan companies. Two years later, £2,100 of his £2,500 monthly salary was disappearing to pay off 19 different loans.

He approached Hampshire Credit Union in February and was immediately struck by how they treated him as a person and dealt with his whole problem. The loan he took out to pay off the other debts reduced his monthly payments by £1,600.

“I wasn’t controlling money, it had been controlling me,” he said. “I didn’t like the person I had become. I was introverted, I didn’t want to talk to anyone, and all I could think about was money. But on the day we sorted this out, I fell into my wife’s arms with relief.”