The Church of England, which already refuses to invest in doorstep lending, has recently made an announcement stating that it will now ban the practice of investing in payday advance companies as well.
Payday loans have been under fire lately from many fronts, as detractors have taken to calling providers of instant cash loans ‘legal loan sharks’ and have called upon the Government to regulate the industry more heavily. Lenders in the UK are not nearly as regulated as ones in Europe or in several American states, which has led to British lending companies charging a wide range of interest rates.
Figures recently revealed by the Office of Fair Trading have shown that consumers this year have been making complaints against payday lenders more than twice often than they did in 2010. Now, the Church of England, which has more than £8 billion in investments, has acted to extend it doorstep lending ban to be inclusive of the rapidly growing payday lending industry as well.
Church advisers expressed worries that it might end up investing in payday lenders operating within the country that were owned by American firms. The Church of England’s Ethical Investment Advisory Group’s chairman, James Featherby, remarked that the Church has come to the realisation that the universal importance of credit cannot be understated, but cannot bring itself to sanction investment activity in regards to companies providing short term loans to customers in the UK.
Meanwhile, industry insiders point out that while interest rates advertised by payday lenders are calculated on an annual percentage rate, or APR, which is grossly inappropriate for short term lending. Payday lenders have no choice to use an APR calculation in their adverts, experts say, as British regulations require them to do so.