In its crusade against high-interest lenders, the Church of England is now focusing on primary schoolchildren, saying that kids as young as four should attend “savings clubs” to teach them how to handle money responsibly and avoid debt.
The plan drafted by the Archbishop of Canterbury’s new task group on responsible credit and savings would be piloted in Church of England primary schools. The proposal aims at helping children avoid dependence on payday lenders or accumulating heavy debts later in life.
The Archbishop of Canterbury, Justin Welby, has been a vocal critic of payday-lenders. Last year, Welby said that he wanted to force Wonga Group—a prominent high-cost lender—out of business by expanding credit unions.
“Payday lenders” are companies that issue small, short-term loans at high interest rates, on the agreement that the loan will be repaid when the borrower receives their next paycheck. They often prey on financially desperate people willing to accept virtually any conditions in order to secure a loan.
Archbishop Welby faced painful embarrassment in 2013 when it became known that the Church’s financial arm, the Church Commissioners, had a stake in Wonga through an investment fund. It was not until June, 2014, that the Church managed to divest itself from the investment.
The new $1.6-million pilot program will start in six areas of the country, but the Church of England hopes to expand it into all of its 4,500 primary schools, which account for one in four of all primaries in England.
Britain’s Financial Conduct Authority has launched new controls on payday lenders to be effective this coming January. The new regulations set a per-day interest cap at 0.8%, a cap of £15 for defaulting on payday and a cap on total loan cost of 100% of the loan. The restrictions have been adopted to protect borrowers from the exorbitant rates now in effect, insuring that borrowers will never have to pay back more than twice the original loan.
The new restrictions are expected to drive a number of high-interest lenders out of business. Industry expert Carl Packman told Bloomberg: “You will see providers voluntarily leave the market. That’s a consequence of tougher and better regulation.”
According to FCA chief Martin Wheatley, only a few high-street lenders will continue in business once the proposals come into force in January.