Two new reports have called for more support to ensure the Credit Union sector can increase its reach.
The Carnegie Trust has published its findings into existing affordable credit provision in seven Scottish Council areas, and called for stakeholders to work together to increase affordable credit providers market share to at least 10% of the current high-cost credit market.
The report estimates that this could save low-income households in the seven areas almost £5 million a year. The report also identifies the success of schemes such as loans secured against benefit payments as being key to the success of the credit unions in penetrating these markets.
It is recommended that Credit Unions, Trade Associations, Local Authorities and the Scottish Government work together to increase the reach of Credit Unions.
Sarah Davidson, Chief Executive of the Carnegie UK Trust said “These are difficult areas to address, but, as the report highlights, there are a range of interventions available to local authorities that can make a significant difference. Lenders are increasing their online presence, seeking to build relationships with borrowers whilst embracing the advantages of new technology to do so in an efficient way. COVID-19 has further accelerated the pace at which the affordable credit sector was moving towards an online presence. They need support and exposure as much as capital and premises – and local authorities can play a vital role here.:
Separately the Co-operative Party has also launched a new plan to promote a strong alternative financial services sector last week.
The Co-operative Party report calls for more support for the sector stating that the Government should support the growth of the credit union movement – this was the case pre-coronavirus but even more of an urgent priority now.
The report says that Credit Unions succeed in offering affordable, fair products in diverse sectors and communities. Their democratic member-owned structure means they put their people not their profits first, and everyone has a say and a stake in the system that looks after their money.
The report also calls for all public sector employers to establish payroll deduction schemes, and for it to be a requirement of tendering for public contracts.
Credit Union Association, ABCUL says that it has worked with both organisations in their research for these reports, and welcomes the findings.