Exclusive Cheap Loans For Everyone Credit Crunch Crisis
By James Lyons Political Correspondent 30/06/2008
Low-COST loans offered by credit unions will be made available to all, it will be announced today. Local co-operative savings clubs will be massively expanded to stop families facing soaring food and fuel costs being forced into the hands of loan sharks.
There are about 500 credit unions across the country, offering members cheap loans and simple savings schemes.
They have only 500,000 members because of strict laws on who can join dating back up to 100 years.
But the regulations limiting their size will be scrapped, Treasury minister Kitty Ussher will reveal. Credit unions will be able to team up with firms and other bodies such as councils and housing associations to sign up members over wide areas.
And they will be allowed to offer extra services to help make them attractive.
Ms Ussher will announce sweeping changes at the launch of an all-party Parliamentary group to promote savings clubs.
They will be backed with £38million of Government cash to double low cost-loans from unions, charities and other non-profit lenders. Credit unions can offer a "21st Century" solution to stopping people running up debts with doorstep lenders or brutal criminal gangs, according to Ms Ussher.
She will say: "I believe that everyone should be able to get affordable credit, especially when I know families are facing a tough time. Credit unions can help."
Ms Ussher, the Economic Secretary to the Treasury and MP for Burnley, will argue that being shut out of the financial system creates extra costs, often for people who can least afford them.
Some legal doorstep lending firms charge interest rates as high as 200 per cent but many on low incomes have no alternative.
Credit unions have had to be linked by a "common bond" under laws dating back to their beginnings a century ago. That is being scrapped along with rules preventing companies and other bodies putting money in to savings schemes.
Ms Usher will tell MPs: "These changes will remove outdated and unnecessary restrictions limiting credit unions from competing on a level playing field.
"By doing that we can free the sector to achieve more and help make common ownership a genuine alternative."
Source:
http://www.mirror.co.uk/news/topstories/2008/06/30/lending-a-hand-89520-20626320/
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