Speaking at today’s Association of British Credit Unions (ABCUL) ‘Future of Welsh Credit Unions’ event, North Wales Assembly Member Mark Isherwood highlighted the need for the next Welsh Government to support them beyond 2017 to ensure their sustainability.
Mr Isherwood, the Shadow Communities and Housing Minister, said with only 2.5% of people in Wales currently using Credit Unions, they need support to grow and become the preferred alternative to high interest lenders.
He said:
“As the Centre for Social Justice has stated, we need to ‘enable consumers to take on credit without taking on unmanageable debt, allow debtors access to the type of debt advice right for them, give every consumer the opportunity to learn how to manage their money effectively, and encourage Britain to develop a savings culture again’.
“Welsh Conservatives have supported investment in Credit Unions and the development of financial services through Credit Unions as an alternative, safe and reliable way of saving and borrowing money.
“However, my Building Society background and qualification as an Associate of the Chartered Institute of Bankers taught me that all financial services providers, including Credit Unions, must have the expertise to manage lending risk and assess their borrowers’ capacity to repay debt.
“Much will depend upon Credit Unions in Wales working together and growing their saver base, enabling the development of both smaller, shorter term loans and other products including secured mortgages and car loans.
“Financial affordability, education and inclusion are key, with Credit Unions making personalised assessments and serving many who would otherwise be excluded from mainstream credit.
“A year ago, North Wales Credit Union told me they had decided not to become involved in the first wave of credit unions adopting the UK Credit Union Expansion Programme's automated loan decision Banking Platform on cost grounds - and that they were working with other Welsh Credit Unions on the route forward.
“At their Annual General Meeting in January, we heard that in an estimated 35 million of the 52 million loan transactions annually in the UK, people would save by using a Credit Union, yet only 2.5% of people in Wales currently use Credit Unions” and “that Credit Unions need to grow and become the preferred alternative to high interest lenders”.
“When I last met ABCUL three months ago, they told me that with current Welsh Government funding due to end in 2017, the key issue facing Credit Unions is financial sustainability. They told me that Credit Unions in Wales need to develop a solid evidence base showing added social value and to focus on broadening their membership base.
“To achieve this, they are working with Credit Unions in Wales to develop a collaborative strategy, but they need the next Welsh Government to provide capacity building support for the transition beyond 2017.
“Our 2016 Manifesto will state that Welsh Conservatives will support credit unions to ensure their sustainability, working with them to improve financial inclusion and access to affordable finance.”