Credit union funding to head off loan sharks
The government is pumping £38 million into credit unions in a bid to discourage people from using loan sharks and payday lenders.
The money, which follows a £13 million investment last year, is intended to help credit unions improve their IT systems and infrastructure so they can help more people who are struggling with their finances. It will be spent up to March 2015.
Credit unions are generally member-owned organisations that offer loans at more competitive rates than more aggressive types of short-term lending.
Announcing the funding yesterday, welfare reform minister Lord Freud said: ‘Credit unions provide an essential service for communities and we want to help them to extend the support they provide.
‘Our investment will help credit unions reach up to one million new customers providing a real alternative to rip-off interest rates from payday loans, doorstep lenders and illegal loan sharks.’
The government also intends to consult on allowing credit unions to increase their 2 per cent cap on interest rates.