A plan to expand the UK's network of credit unions is taking shape after 31 groups joined a government project designed to curb the influence of payday lenders.
The Association of British Credit Unions (ABCUL) said that 31 unions had signed up to the first wave of a £36 million government initiative, with more expected to follow.
The scheme is designed to double the membership of the non-for-profit institutions to two million over the next five years, and to increase their range of financial services to include budget-assisting current accounts and cash ISAs.
By raising the profile of credit unions, it is hoped that over a million hard-pressed consumers will be encouraged to use them instead of resorting to payday lenders.
In doing so, estimates show that they could save up to £1 billion in interest payments alone by March 2019.
These findings last month led welfare reform minister, David Freud, to describe credit unions as “the antidote to predatory loan sharks or high-interest lenders”, saying they were a vital alternative for the vulnerable (read more).
Mark Lyonette, the Chief Executive of ABCUL, which will be handling the expansion plan, praised the “ambitious and timely project” to proliferate the network.
"We will be supporting credit unions to offer a much wider range of great value products to many more members from a broad range of income groups,” he said.
He also confirmed that unions would be upgrading their systems to allow members to access financial services online.
“Consumers will soon be able to benefit from the latest online technology to sign up to credit union services such as current accounts, budgeting accounts and cash Isas,” he said.
Are you a credit union customer? If not, would you be interested in using credit unions if they expanded their services? Let us know by leaving a comment below.
Keith McDonald
Which4U Editor
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