The Northern Ireland Council for Voluntary Action is planning to develop an alternative to expensive payday loans for people in Northern Ireland and has made £25,000 available for the project.

Nicva’s Centre for Economic Empowerment (CEE) is seeking a contractor to work on the scheme and has issued an invitation to tender. The deadline for responses is the end of October and the CEE hopes to produce a report outlining an alternative to payday lenders by next spring.

Eoin Rooney, coordinator of the CEE, said: “About a year ago we became concerned, as did much of the voluntary sector, about the rise of payday loan companies.”

Last spring, the umbrella body carried out research into both legal and illegal expensive lending and held a roundtable to discuss the issue. Rooney added it was clear that: “People need credit. It is quite complex but we hope this will lead to an affordable alternative to the expensive payday loan companies.”

Rooney explained that while some people see credit unions as an alternative to payday lenders, there are issues around the limit on the amount of interest credit unions are allowed to charge, which is 12.68 per cent.

He added that one of the key reasons people used payday lenders was “speed of access” and that was something that needed to be addressed.  

During the summer the Archbishop of Canterbury vowed to force payday loan company Wonga “out of existence” with a plan to create a network of credit unions, before discovering that the Church of England had indirectly invested in the company.