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Credit unions aim to beat payday lenders at their own game Credit unions aim to beat payday lenders at their own game
(about 3 hours later)
It's almost too easy to mock the credit union movement as one-vicar-and-a-dog outfits, well-meaning but hopelessly antiquated, that are fit perhaps for the 17th century but not this one. Eight have already gone under this year, ruined by bad debts and poor management, with the odd one attracting a visit from the local police. Does Archbishop Welby seriously think a trestle table in the church hall can take on Wonga.com and the £15m it spends on advertising? That benevolent but naive parishioners can outwit the local loan sharks? It's almost too easy to mock the credit union movement as one-vicar-and-a-dog outfits, well-meaning but hopelessly antiquated, that are fit perhaps for the 17th century but not this one. Eight have already gone under this year, ruined by bad debts and poor management, with the odd one attracting a visit from the local police.
The righteous Archbishop's war on Wonga – he has declared that the church aims to "compete you out of existence" – will inevitably invite derision. But to give him credit, so to speak, he (along with MP Stella Creasy) has pushed payday lending to the front of public debate. And maybe, just maybe, change can happen. Does Justin Welby seriously think a trestle table in the church hall can take on Wonga.com and the £15m it spends on advertising? That benevolent but naive parishioners can outwit the local loan sharks?
Lucky Chandrasekera, head of the London Mutual Credit Union (LMCU), points to Ireland, where seven-in-10 people are members of credit unions. "They used to operate from church halls, but are well established now; they have their purpose-built offices in every parish. We could bring the same idea back here so if people need any short term loans, they will come to the church or to their local credit union." The righteous Archbishop's war on Wonga – he has declared that the church aims to "compete you out of existence" – will inevitably invite derision. But to give him credit, so to speak, he (along with Stella Creasy MP) has pushed payday lending to the front of public debate. And maybe, just maybe, change can happen.
Lucky is no wide-eyed dreamer. The LMCU is at the forefront in tackling the payday lenders on some of their most lucrative turf – the run-down estates of Peckham and Camberwell in south London. On Thursday, LMCU opened another branch, in Camden. And it lends sums of £100 to £1,000 at 26.8%, which may sound pricey to the middle classes, but is one-hundreth the rate charged by the payday merchants. Lucky Chandrasekera, head of the London Mutual Credit Union (LMCU), points to Ireland, where seven-in-10 people are members of credit unions. "They used to operate from church halls, but are well established now; they have their purpose-built offices in every parish. We could bring the same idea back here so if people need any short-term loans, they will come to the church or to their local credit union."
Much more importantly, LMCU is not relying on the branches. It has a website, cuok.co.uk, that is dedicated to supplying payday loans and matches Wonga.com at its own game. Chandrasekera is no wide-eyed dreamer. The LMCU is at the forefront in tackling the payday lenders on some of their most lucrative turf – the run-down estates of Peckham and Camberwell in south London. On Thursday, LMCU opened another branch, in Camden. And it lends sums of £100 to £1,000 at 26.8%, which may sound pricey to the middle classes, but is one-hundreth the rate charged by the payday merchants.
Much more importantly, LMCU is not relying on branches. It has a website, cuok.co.uk, that is dedicated to supplying payday loans and matches Wonga.com at its own game.
But LMCU remains an outlier in the credit union movement, itself deemed "not financially sustainable", in a report last year for the Department for Work and Pensions.But LMCU remains an outlier in the credit union movement, itself deemed "not financially sustainable", in a report last year for the Department for Work and Pensions.
The government is pouring billions into Help to Buy and Funding for Lending to pump up the property market. Now that models such as LMCU are emerging, is it time to divert at least some of that to the credit unions?The government is pouring billions into Help to Buy and Funding for Lending to pump up the property market. Now that models such as LMCU are emerging, is it time to divert at least some of that to the credit unions?