Credit unions get £38m to take on loan sharks
The Government is splashing out £38m to help credit unions take on payday lenders.
The Department of Work and Pensions handed the cash to the Association of British Credit Unions (Abcul) to help unions expand and modernise.
It is hoped the move could save hard-up borrowers up to £1bn in loan interest repayments by March 2019. That is the extra amount they would have been charged if forced to turn to short-term, high-cost lenders such as Wonga, which quotes an APR of 4,214 per cent.
David Freud, the Minister for Welfare Reform (pictured) said: "Credit unions offer an alternative to vulnerable people who have few safe options to get cash when they need it most. They are the antidote to predatory loan sharks or high-interest lenders."
Credit unions are mutual financial co-operatives – usually set up in workplaces or local communities – that take deposits and give loans to their members.
The UK has about 400 credit unions, so the sector is still relatively small compared with other countries such as the United States and Canada, although those 400 unions add up to about 470,000 members.
It is hoped that the new cash will help the credit union sector attract a million more members in the next six years. Credit union rules have been relaxed, allowing them to compete more effectively with banks by offering current accounts or even a much cheaper form of payday loan.
Last December the Government announced plans to make it easier for credit unions to offer small short-term loans to lessen some people's reliance on payday lenders. Abcul's chief executive, Mark Lyonette, said: "More credit unions will offer a wider range of products including current accounts, Cash ISAs and innovative budgeting accounts.
"The centralisation and streamlining of day-to-day tasks and the introduction of innovative modern access channels will make credit unions a much more attractive proposition to many more people and secure a solid future for the sector."
- 1 Husband creates spreadsheet detailing wife's 'excuses' for turning down sex
- 2 UK pirates will get four warning letters a year
- 3 Saneie Masilela, 9, marries Helen Shabangu, 53 years his senior, for the second time
- 4 Time runs out for Christian Iraq: Isis deadline passes with mass flight
- 5 Why I'm on the brink of burning my Israeli passport
Saneie Masilela, 9, marries Helen Shabangu, 53 years his senior, for the second time
Time runs out for Christian Iraq: Isis deadline passes with mass flight
Miley Cyrus death hoax: Fans distraught after Facebook scam goes viral and she doesn't tweet for three days
Malaysia Airlines MH17 crash: France and Germany accused of going soft on Putin as sanctions talks stall
Israel-Gaza conflict: Deadly flechette shells 'used by Israeli military in Gaza Strip’
Malaysia Airlines flight MH17 crash: 'Nine Britons, 23 Americans and 80 children' feared dead after Boeing passenger jet is 'shot down' near Ukraine-Russia border
Malaysia Airlines MH17 crash: Vladimir Putin is given 'one last chance' to end hostilities in Ukraine
The truth about conspiracy theories is that some require considering
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
Malaysia Airlines MH17 crash: Obama - 'We’re going to make sure that truth gets out'
- < Previous
- Next >
iJobs Money & Business
£28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...
£28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...
£60000 - £75000 per annum + BONUS + BENEFITS: Harrington Starr: Business Anal...
£70000 - £90000 per annum + Job Satisfaction: Harrington Starr: Project Manage...