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Praise for ethical borrowing scheme in Tenbury
A SCHEME in Tenbury to help people in severe financial difficulties has the blessing of The Bishop of Ludlow.
He was in Tenbury to see the NILS (No Interest Loans Scheme) scheme that enables people to borrow up to £400 and repay over 12 or 24 months.
Bishop Alistair Magowan said that the Church is seeing increasing signs of people in severe difficulties resulting in some having to borrow to pay for the very basics of life such as food.
The Tenbury initiative, which is largely funded by a local benefactor is unusual in that rather than provide money the loan comes in the form of a product from a local supplier.
It can be used to purchase items such as basic household electrical goods like washing machines or even clothing.
The idea originates in Australia and is also unique in that unlike a credit union there is no interest or administration fee leaving the borrower just to repay the capital.
Tenbury NILS is currently working with 25 local customers but has the capacity to double this number.
It has the ultimate sanction of a ‘memorandum of ag reement’ with the Department of Work and Pensions that as a last resort allows the NILS scheme to recover funds from the benefits eligible to a ‘borrower’ in default.
“We would always try to reach an agreement and only use this as a last resort and we have not had to do this so far,”
said Jane Newton who chairs the g roup, which runs the scheme.
Bishop Alistair Magowan who met members of the group said it was the role of the church to help vulnerable people and he welcomed initiatives that provide affordable credit.
“I believe that the church should be concerned and involved but I do not see there being a Bank of the Church of England,” he said.
He added that access to credit was a part of life but the issue was that rates of interest must not be excessive or unreasonable.
“Credit is a necessity but enslaving debt is a curse,” he said.
“We are seeing growing signs of poverty and an increasing number of people facing severe financial problems.
“In the diocese of Hereford that includes Tenbury and Ludlow there has been a 200 per cent increase in the number of people asking for help from the Food Banks over the past year.”
The Archbishop of Canterbury Justin Welby is encouraging churches to work with credit unions to enable more people to access local, ethical and affordable financial services.
The long term plan for the Tenbury NILS scheme is to become a Credit Union but this will not happen before 2015.
As a Credit Union it would charge borrowers interest and pay interest to ‘investors’ but at lower rates than apply with commercial financial institutions.
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