Companies ‘could offer their own loans’ to employees

Employers could offer their own way for their staff to avoid getting into severe debt – by being a source of loans to them.

This suggestion has come from performance and reward advisor for the Chartered Institute of Personnel and Development Charles Cotton, who said companies that are large enough and have sufficient resources to set up a credit union should think about doing so.

Explaining his reasoning behind the idea, he said: “They can offer small amounts of money at relatively low levels which means that these individuals don’t have to go to pay high charges through the banks, or even worse through loan sharks.”

Such a situation could offer people an alternative to borrowing on plastic and thus running up large amounts of credit card debt, as well as ensuring people are borrowing from a responsible, legal and affordable source.

And it may also be beneficial for the company because its staff will not be stressed about how much they owe, a situation many employers may face at present as some of those working for them fear repossession or have debt management issues.

The level of stress felt by some people may have damaged their working performance due to them being kept awake all night by worry about their financial problems.

Evidence for this was provided recently by the Consumer Credit Counselling Service, which revealed nearly 50,000 of the people calling its 24-hour debt helpline last year did so between the hours of midnight and 07:00, which it said was clear evidence of finance-related insomnia.

By Joe White