Credit unions best hope to tackle financial exclusion
9th March 2010
Support for the supply of affordable credit through credit unions both now and after the election was discussed at a major conference last week. According to the Association of British Credit Unions Limited (ABCUL), if there is to be a real impact on financial exclusion, Government needs to act to create a step change in the scale and effectiveness of the sector.
Speaking about the importance of financial inclusion and the distinct value of credit unions, ABCUL Chief Executive Mark Lyonette told the Northern Money Conference in Liverpool that Government needs to make a one off investment in back office services for credit unions. This will bring economies of scale to the sector and allow more credit unions to offer a wider range of services to new and existing members.
“Crucially this will also allow credit union services to be made available through the Post Office network,” he said.
“Only credit unions can meet the financial needs of lower income consumers and extending the banks’ services through Post Offices won’t improve the situation.
“Post Office customers not serviced by banks can pay upwards of 200 per cent in interest for loans, which credit unions provide for a tenth of the cost.
Speaking at the conference, Helen Goodman MP, Minister for Financial Inclusion at the Department for Work and Pensions, said: “We are committed to ensuring people on low incomes have access to the financial services and advice many of us take for granted.
“The government has invested almost £100m through the growth fund for credit unions and has now helped more than 240,000 people
"The credit union movement plays a vital role in helping people get through difficult financial circumstances.
“It is changing the lives of those who were in debt by helping them to build and rely on their own savings rather than borrowing from unscrupulous lenders.”
Mark Hoban MP, Shadow Financial Secretary to the Treasury, told delegates: “Financial inclusion will matter to the next government. Unless we take financial inclusion seriously, families won't be able to put their finances back on the right track.
“We need to give people the support, including advice and guidance and strengthening credit unions, to enable them to make the best choices for their families.”
Mark Lyonette added: “The Government also needs to hold banks to account on their previous commitments to support the expansion of affordable credit.”
ABCUL believes an effective way to ensure this is for bank staff to volunteer on the Boards of credit unions, using their skills and experience to help the sector develop to its full potential.
Mark Lyonette concluded: “We are looking forward to the reform of credit union legislation later this year which will help modernise the whole credit union sector and remove many of the barriers which currently stop us delivering our services more widely.”
The Northern Money Conference was organised by the Association of British Credit Unions (ABCUL), the Research Unit for Financial Inclusion at Liverpool John Moores University and Citizens Advice, and was supported by The Co-operative Bank.
- E n d s -
Notes to Editor:
The Northern Money Conference took place on Monday 1 March 2010 at the Contemporary Urban Centre (CUC), Liverpool. Speakers included: Helen Goodman MP, Parliamentary Under-Secretary of State at the Department of Work and Pensions; Mark Hoban MP, Shadow Financial Secretary to Treasury; Graham Leftwich, Business Leader Corporate Communications, Co-operative Financial Services; Teresa Perchard, Director of Policy, Citizens Advice; Sophia Parker, Acting Director, Resolution Foundation; Paul A Jones, Research Unit for Financial Inclusion, Liverpool John Moores University and Mark Lyonette of ABCUL.
ABCUL is the main trade association for credit unions in England, Scotland and Wales. At the end of June 2009, ABCUL's 325 credit unions were managing nearly £450 million of members' savings on behalf of over 550,000 people, and had over £375 million out on loan.
ABCUL is the country’s largest development, information and training network for new credit unions. It is a democratic, not-for-profit organisation and is improving day-to-day operations, legislation and regulation for all credit unions.
Credit unions are licensed deposit takers, authorised and regulated by the Financial Services Authority. They are covered by the Financial Services Compensation Scheme, so the first £50,000 of a member’s savings are completely safe.