Council to consider credit union investment to tackle payday lender rise
Renfrewshire Council wants to deliver the latest stage of its major £500,000 commitment to fight payday lenders and promote ethical banking.
Two local credit unions could receive an investment of over £220,000 if the move is approved by the council’s next Leadership Board.
The council wants to work more closely with credit unions to make sure local people have access to their affordable rates and wants to commit £200,000 to Renfrewshire Wide Credit Union (RWCU) and £27,000 to White Cart Credit Union (WCCU) to take this forward.
The money would support development to help the credit unions modernise services; build capacity to meet wider demand; offer a greater variety of ethical products; build on financial education work in local schools; and raise awareness of the benefits of credit union membership while also encouraging saving and budgeting.
Councillor Mike Holmes, Renfrewshire Council’s Depute Leader said: “We are willing to be bold and innovative in our two-fold fight against payday lenders and poverty – that’s why we earmarked £500,000 for this in this year’s budget – and I see this proposed investment in two local credit unions as a major part of that.
“To tackle the sharp rise in high interest loans and the negative impact they have on families, we must make sure an alternative is in place by providing access to dependable banking services and affordable credit. And I’m delighted that one of RWCU’s new proposals is to develop an express loan.
“Credit unions can help us reduce the financial exclusion and poverty cycle that many Renfrewshire residents on low incomes and state benefits often face. This funding could be a major step forward in ensuring they are equipped to support communities to their full potential.”
As part of the UK Government’s planned Welfare Reform programme, Universal Credit will be introduced to replace six key benefits, including Housing Benefit and it will be paid directly to bank accounts.
Not only will the claimant need a transactional account for this, but will also have to budget to ensure the Housing Benefit element is paid to their landlord. Budgeting accounts that can help tenants cope with Universal Credit (currently planned for 2016 roll out) would also be developed by RWCU if this investment is approved.
A paper recommending consideration of the £227,000 allocation will go to the council’s Leadership Board for a decision on 4 June 2014.
Additional investment has been made to set up the Council’s iSave Credit Union Initiative, where all S1 pupils will be offered a credit union account with a £10 deposit from the council, is now underway. Application forms to join are with P7s so their accounts can be opened when they start high school in August.