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New report backs credit union growth

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29 Feb 16

A new report published by the Carnegie UK Trust has called for support for credit unions to expand to serve more consumers.

The report – Gateway to Affordable Credit – calls for a step-change in Scotland’s approach to its credit industry in order to break the cycle of financial exclusion experienced by many of the country’s most deprived citizens.

The Carnegie UK Trust brought together an Affordable Credit Working Group, consisting of representatives from across Scotland’s financial industries as well as the third and public sectors – including representation from ABCUL – which spent a year analysing financial inequality in Scotland and considering solutions.

The report calls for a range of measures from investment in community finance and enabling workers to repay credit union loans via payroll, to Scottish Government leadership and facilitating access for Scotland’s poorest borrowers to basic bank accounts.

Social Justice Secretary Alex Neil MSP said: “The Scottish Government welcomes the publication of the Carnegie report on affordable credit as we recognise financial inclusion and accessibility plays an important role in our efforts to reduce inequalities and create a fairer, more prosperous society.

“We want to ensure that people are able to borrow affordably and treated fairly, that they can access good financial and debt advice, that they have access to basic bank accounts, where appropriate, and are assisted with financial management. We are strongly supportive of community finance providers, and are already providing leadership in this area, including work to promote the credit union sector and grow their capacity in Scotland.”

The report backs a key aim of ABCUL’s Credit Union Charter by calling for employers in Scotland to partner with credit unions to make repaying credit union loans via payroll a standard workplace benefit.

Co-Chair of the Affordable Credit Working Group Jeremy Peat (former Chief Economist of RBS and a Visiting Professor at the University of Strathclyde’s International Public Policy Institute) said: “Enabling Scotland’s poorest people to repay credit union loans via payroll will provide the structure and support required to help them access more affordable loan products and improve their financial position. It would also grow the membership base of credit unions, helping them to expand their loan book and become more competitive as credit providers to disadvantaged groups.”

ABCUL’s Frank McKillop said: "As the largest providers of affordable credit in Scotland, we welcome support for the co-operation, innovation and diversification of services which will help Scotland's credit unions grow and strengthen to sustainably offer affordable and accessible loans to people on all income levels."

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