Credit unions get chance to offer loan alternative

Since coming to power last year, the coalition government has been best known for its cuts as it seeks to deal with the public finances, but it is also involved in initiatives concerning the level of financial strain faced by individuals.

For some, access to credit through mainstream lenders is difficult to obtain, which has been recognised as leading some to look towards doorstep lenders and loan sharks as an alternative, with all the perils of sky-high interest rates this involves.

Credit Unions have been suggested as an alternative and the government has decided to back this idea, with £73 million of funding announced to help such bodies extend and enhance their services.

Such a move has been welcomed by chief executive of the Association of British Credit Unions Mark Lyonette, who said: “Credit unions have shown they can provide the financial products and services that people on lower incomes need – and want – but often struggle to get elsewhere.”

And a second government move will see Post Office facilities being made available for credit union transactions, which Mr Lyonette said will make it easier for people to get “access to credit union services – such as bank accounts, bill payments, safe savings and low cost credit”.

Those keen to get a better credit deal when it comes to loans may also benefit from new rules agreed by the British Bankers’ Association, the Building Societies Association and the UK Cards Association.

More responsible lending and greater help for those with difficulty paying are among the provisions of the new code announced this week.

By James Francis