Following the launch of the government’s call for evidence on credit unions in June, the Economic Secretary today visited London Mutual Credit Union to hear first-hand how credit unions are providing a payday loan product at a fraction of the costs charged by payday lenders.
This latest push follows significant government action in this area, including modernising the existing legislation governing credit unions and lifting the cap on the maximum interest rate credit unions can charge from 2% to 3% per month to help the credit union movement grow, as well as legislating to allow the FCA to impose a cap on payday loans costs.
There has also been significant wider interest in the work of credit unions. For example, the Archbishop of Canterbury has launched a Task Group on Responsible Credit, led by Sir Hector Sants, and Lloyds and Barclays have promised £4 million and £1 million respectively of funding for credit unions.
Economic Secretary to the Treasury, Andrea Leadsom said:
"Credit unions play a vital role in their communities, providing access to affordable credit for those who need it most. This government is determined to help credit unions provide these services to even more people. That is why I am today urging private sector employers and wider society to consider what more they can do to promote the use of credit unions among their employees and communities."
Lucky Chandrasekera, Chief Executive of London Mutual Credit Union said:
"Credit unions are seen as the growing local financial service providers in the UK and best able to help the most vulnerable people in our community. Given the right framework, technology and leadership, they are poised to provide a real alternative to payday and door step lenders for anyone looking for affordable and ethical finance."
