Some of the poorest residents in the Cotswolds, Tewkesbury and the Forest of Dean now have an alternative to borrowing from loan sharks, after one of the county’s three credit unions was given permission to offer its services county-wide.
Gloucester City Credit Union has been given permission to expand its common bond to the whole of Gloucestershire by the Financial Services Authority.
This means the credit union can provide services to people whose communities were not previously covered by a credit union.
The expansion was supported by Gloucester’s new MP, Richard Graham, who used his maiden speech in the House of Commons to draw attention to the issue. Gloucestershire County Council, Trading Standards, the Job Centre, a number of the district councils and housing associations also lent their support to the bid.
The expansion is seen as an important move in combating loan sharks, who lend money to people otherwise unable to secure finance, but charge exorbitant levels of interest. There are currently seven ongoing investigations by the Illegal Money Lending Team in the county.
A recent BBC investigation revealed that in some parts of the county as many as one in five households had borrowed money from loan sharks.
Credit Unions offer members a responsible and low-cost way in which to borrow money. Members must be savers before they can become borrowers, and can receive financial education.
Unlike banks, credit unions are run on a not-for-profit basis, meaning their obligation is to members, rather than shareholders.
Margaret Knight, the chairman of Gloucester Credit Union, explained: “Credit Unions in Great Britain have up to now been largely unknown by the general public, but with the current government emphasis on the Big Society and mutual self help initiatives the Credit Union movement is ideally placed to offer services to the community especially those who are ‘financially excluded’ from mainstream banking services and forced to use doorstep lenders.”
In his maiden speech to the House of Commons, MP Richard Graham described the potential for credit unions to play a role in the future of the Post Office as “the most exciting opportunity for combating loan sharks that we have seen in this country for a long time.”
“In my constituency, the new Gloucestershire Credit Union, which is partly funded by the Department for Work and Pensions, represents an important step forward for us all in our different constituencies,” he said.
The bid to the FSA to extend credit union services across the county was supported by Gloucester-based Co-operative Futures, who helped to form a steering group to help develop the countywide services comprising of local authorities, social landlords, Trading Standards and the Job Centre.
The initiative has also been supported by the Suzanne Wigmore, Financial Inclusion Strategic Champion for Gloucestershire from the Department for Work and Pensions, who said: “We support the growth of credit unions to provide members with a place to save, access to borrowing at reasonable rates and help improve levels of financial capability. We are delighted that residents in parts of the county who never before had access to a credit union can now become a member of one.”
And housing association Oxbode, which manages homes in Gloucester and the surrounding areas, committed £2,000 from its community budget to support the development of the credit union.
CEO Jim Dickson said: “Being small, managing just over 600 properties, Oxbode is aware of many of the issues faced by our residents, many of whom are on very low incomes. We are , therefore, particularly keen to support the expansion and development of the credit union and to promote it’s activities as much as possible both to our staff as well as our residents, some of whom we know have been leafleted at home by unscrupulous lenders”
Meanwhile Ashley Green, chief executive of Gloucester City Homes, which manages 4,800 properties in the city, said: “The threat of illegal money lenders is likely to be an increasing problem in the current economic climate. Gloucester City Homes is pleased to support the new county wide Credit Union which will provide our residents with a greater opportunity to save on a regular basis and borrow money safely and at an affordable rate.”
For more information about Gloucester Credit Union log on to www.gloscreditunion.org.uk
Picture by Now and Zen Photography at FreeDigitalPhotos.net www.freedigitalphotos.net/images/view_photog.php?photogid=1440