THE Bishop of Durham has spoken of the “huge potential” of credit unions and called for Government support to help them provide finance for the less well off.
The Rt Rev Justin Welby, who will become the most senior clergyman in the country next year when he takes over as Archbishop of Canterbury, said: “The time for credit unions has come in a way that we haven’t seen since the 19th century.”
Credit unions could “come into their own” with the help of further Government investment and the major banks should second their “brightest and best” staff to help boost their development, he said.
His comments came in a debate on credit unions as peers from all sides praised their role in providing affordable credit as an alternative to payday loans but called for further expansion to ensure their viability.
A member of the Parliamentary Commission on Banking Standards, the bishop said credit unions tended to be “quite parochial”, have “strong rivalries” and not be good enough at co-operating.
Their IT systems were “notably lacking” and they faced the problem of an interest rate cap. “All these things are holding the credit union movement back,” he said. But he welcomed the Department for Work and Pensions’ commitment to “significant investment” in the sector over the next few years, insisting: “There is huge potential in the credit union movement. It keeps capital and profit at a local level.”
Investment in credit unions was “cost-effective, good for consumers and a good investment of Government money”, he said.
Susan Lonsdale, from the Credit Union for South East Northumberland, last night welcomed the bishop’s support.
She said: “With the economy as it is this is good news not only from the aspect of the interest and loan side of things but hopefully we can still encourage the saving element for people, so from both sides of the coin really.”
Ms Lonsdale added: “We have a very modernised system here but not all credit unions have been that fortunate. We need to compete with banks and this can be done through modernisation and investment in credit unions.
Bishop Welby’s latest comments came after he earlier this year criticised payday loan companies as “immoral”.
He has also criticised a number of the main high-street banks through his role on the Banking Commission.
Welfare Minister Lord Freud, replying to the debate, said credit unions could help the Government’s aims to “tackle problem debt and increase financial inclusion”. He said there were 400 credit unions in Britain and £776m was saved with them.