Unite, the country’s biggest union, has today (Tuesday 20 August) announced plans to launch a new credit union network, in a bid to encourage members to save, to take on payday lenders and offer members finance without fear.
The new Unite credit union network will be open to all 1.4 million Unite members, who will be able to open instant access savings accounts, which will then offer low cost loans, including pay day loans, at low interest rates.
Members will also have the assurance that each credit union within the network will prioritise the needs of members and the communities they serve, rather than the interest of shareholders or the City. Supporting members to save, even £5 a month, will encourage a more ethical approach to personal finance and open up more affordable loan opportunities.
Unite says it wants the service to be fully operational by the end of 2013 to meet the pressing need people have to access lower cost finance. It is launching the consultation with members now to identify how they would like to use the service.
Since 2011 Unite has been tracking its members through the cuts. In the first year, the union found members were typically borrowing £200 a month. In 2012, this had swollen to £326 a month, with the money borrowed in third week of the month from a variety of sources including payday lenders. The Unite credit union network will offer an opportunity for members to save significant amounts of money.
This announcement comes as part of Unite’s on-going efforts to tackle legal loan sharks. The union has recently been lobbying parliamentarians to support legislation that would clamp down on unfair interest rates, reckless advertising and promote debt advice.
This will add to the growing pressure on payday lenders, including a recent banning of billboard adverts in Plymouth city centre and other local authorities blocking access to online adverts on council computers.
The network will involve a number of existing regional credit unions partnering with Unite. The union intends to provide these partners with increased scale, while offering Unite members much needed financial support.
Commenting, general secretary Len McCluskey of Unite said: “It is tough for people to make ends meet at the moment. As prices rise and wages fall, Unite members are telling us they’re running out of options – worryingly, a growing number are reliant on payday lenders charging rip-off rates to help them get through the month.
“Disreputable lenders are taking advantage of people in desperate situations and compounding their problems with high cost loans. We are determined to take on these legal loan sharks by offering finance without fear for Unite members.
“The credit union network will put the needs of members and the community first, rather than the interest of shareholders or City bankers.
"Banking in this country no longer works for the common good. So this latest move is part of Unite's plans to challenge this by offering more responsible forms of finance, which will also offer members the chance to open ethical savings accounts.
"Unite members have told us that they need someone on their side during this relentless downturn. So we are determined to ensure the new credit union network meets their needs and is a clear embodiment of Unite members’ values.”
Howard Beckett Unite director of legal, membership and affiliated services added: "The credit union network is part of our continued drive to develop membership services to respond to the needs of members. Unite credit union will operate in partnership with Unite Debt Management and initiatives such as our Unite4Jobs website.There has never been a more important time to be part of a union and Unite will continue to develop those services our members most need."
Those interested in finding out more about the credit union network or sharing their views with Unite should visit: www.unitetheunion.org/CreditUnion
For further information contact James Bevan, Unite campaigns officer, on 07711 347 645
Notes to editors: