Churches take unprecedented action against growth in unethical finance by creating their own credit union
Church groups are waging war on payday lenders and unethical finance – by creating their own credit union.
Spiralling, unmanageable debt among the country’s poorest people has forced the Church of Scotland to join with churches in England and Wales to create the unique venture which is bidding to curtail unprecedented growth in the payday loans sector.
Churches Mutual Credit Union (CMCU) will initially draw members from ministers and church workers before widening out to Scotland’s congregations.
Ordained ministers, elders, employees and trustees of churches and church charities are eligible to join, along with churches and Church of Scotland and Anglican charities.
That means some 35,000 people in Scotland are initially eligible. However, this figure will rise to potentially hundreds of thousands as it is planned to widen the eligibility criteria to include members of congregations.
The move is being backed by some of the highest profile religious figures in the UK – including the Archbishop of Canterbury.
The CMCU, which includes the Scottish Episcopal Church, and the Church in Wales, will offer a range of savings and loan products.
If the referendum in Scotland taught us anything it was that people are clamouring for change in their communities -
Fairness will be at the heart of its values: initially members will be able to invest in the Founder Member’s Bond with ordinary savers accounts and loans becoming available in March. In due course Individual Savings Accounts (ISAs) will be offered.
The Kirk’s Rt Rev John Chalmers said: “About 35,000 ministers, elders and workers in the Church of Scotland will be able to join the CMCU, with the intention of widening the membership in due course.
“Many of the most successful credit unions are, or were originally, employment based, and CMCU will ensure that many people in the community will have first-hand experience of a credit union and be able to pass the word on about the services they can provide.”
The Church of Scotland established a high-powered commission on the purposes of economic activity in 2010 to look into what had gone wrong with the economic system and to suggest how it might be improved.
It set as its principal task to establish how the church could "best offer Scottish society a new vision of what might be achievable in the economic, social and community life of the nation”.
The credit union movement was identified as being able to help deliver an ethical approach to finance.
Chalmers added: “It is through the development and support of new, co-operative and mutual projects like this that society can offer more in the way of financial inclusion.
“A new player in the marketplace will help to influence the financial services industry, and to put first the needs and consideration of all.
“The church is perhaps uniquely placed as having a publicly accessible facility in every community in the country.”
Frank McKillop, Scotland policy manager for the Association of British Credit Unions Ltd (Abcul), said: "As with all sector-based credit unions, CMCU will be able to tailor financial products to the particular needs and circumstances of the people it serves.
"Credit unions exist to build up their members' overall financial health, and so offer an alternative to the short term payday lending model, which rarely serves the interests of the borrower. Credit unions instead encourage people to save regularly and to borrow over a longer period of time, repaying in smaller, affordable instalments to help them truly get - and stay - on top of their finances."
The move, which is being backed by anti-poverty groups as well as business bodies, is being supported by the majority of Church of Scotland dioceses as well as the Church of England, the Scottish Episcopal Church, the Methodist Church and the Church in Wales.
Alan Thornburrow, chair of the Institute of Directors in Edinburgh, said: "If the referendum in Scotland taught us anything it was that people are clamouring for change in their communities. That change goes far beyond a political process however. We all have a personal responsibility to help bring about the change we wish to see. I believe fairer finance is a step in that direction and I hope that the success we are beginning to see will take root."
And Peter Kelly, director of the Poverty Alliance, added: “As poverty levels increase it is more important than ever that people in poverty have somewhere to turn for affordable credit."
