Credit union rule change ‘to help prevent severe debt’

Many people could avoid getting into severe debt thanks to the increased availability of affordable finance from credit unions, the head of a body rep…

Many people could avoid getting into severe debt thanks to the increased availability of affordable finance from credit unions, the head of a body representing such organisations believes.

The Association of British credit Unions Limited (Abcul) has reminded consumers in England, Scotland and Wales that from January 8th they will be allowed to offer new services under updated legislation.

It said this means they can offer a more viable alternative to the costly products of banks and building societies, as well as those of illegal loan sharks.

Abcul chief executive Mark Lyonette said: "The new rules mean credit unions can now compete more effectively with banks and other lenders to provide fair and affordable financial services. Credit unions will be able to reach many more people, helping them to develop a savings habit, which can only be good for communities."

Changes include removing restrictions such as people needing to live in the same area as the credit union they would like to borrow from or sharing a common employer, with no close association required now to receive their financial services.

However, while this may offer people sources of low-cost credit previously not available, many consumers who have been restricted in where and how they can borrow before now may have gone to high-interest lenders and be in debt as a result.

Last month, president of insolvency professional's body Frances Coulson said that the organisation's own research has shown 60 per cent of UK consumers are concerned about how much debt they are in.

By Joe White

Tell others:

shortlink