CREDIT unions are being invited into Notts churches in a bid to drive payday loan companies out of business.
Some of the Diocese of Southwell and Nottingham's 300 buildings will be available to credit unions, which lend money at lower rates, after the Archbishop of Canterbury, the Most Reverend Justin Welby, attacked high-interest payday loan firms.
New figures show that people with payday loans in Nottingham owe an average of £1,660.
Diocesan chief executive Nigel Spraggins said: "We are very open to church buildings being used more than they are and serving local communities. We would be up for using more of the churches for community benefit. It is about encouraging people to sign up to credit unions."
In addition, the diocese is considering investing £20,000 in Nottingham Credit Union in order to become a member.
St Peter's Church, in Nottingham city centre, has already met credit unions.
The Rev Christopher Harrison, vicar of the city's All Saints', St Mary's and St Peter's churches, said: "It makes a statement against people making money out of other people's money. We have church halls and spaces in our buildings. It is a way of getting credit unions into the community. I am happy to offer whatever help we can."
In Nottingham, debt charity StepChange estimates that 19 per cent of adults took out a payday loan last year, compared with eight per cent the year before.
The average owed by Nottingham residents was £1,660 in 2012 – up from £1,346 the previous year.
The number of loans taken out by individuals increased from two to three. Annual payday loan interest rates can be 5,000 per cent.
StepChange spokesman Edward Ware blamed the increase partly on payday companies failing to tell people about the risks involved.
He said: "Out of the 50 top lenders on the market, only six were doing affordability checks. This helps support irresponsible lending. We think that payday ads on television should come with a health warning."
Nottingham Credit Union, a cooperative that promises fair and affordable financial services to anyone who lives or works in Notts, says it has seen a dramatic rise in numbers seeking advice over payday loan debt.
Business development officer Martin Swaby said interest payments skyrocketed into the thousands, adding: "A lady who had borrowed £400 ended up paying £8,000. You look at some of the ways that it's marketed – it's very catchy and appealing. The Government have started making noises about it but more needs to be done.
"The level of interest that some of these companies charge is just so distasteful."
The industry says it is taking steps to improve standards. The Consumer Finance Association was recently set up to help ensure that payday lenders operate according to an ethical code of conduct.
Spokesman Richard Griffiths said: "Our code of conduct makes our members go above and beyond the call of duty. They must conduct robust affordability assessments and these responsible lenders will try to ways to help customers with debt.
"It's all part of the industry becoming more mainstream. Lenders don't want their customers to have the lead weight of debt around their necks. It doesn't make sense for their business to allow that."
