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Credit unions can drive out loan sharks - report

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Credit unions can drive out loan sharks - report

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Published by Max Salsbury for 24dash.com in Communities and also in Finance, Local Government

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Image: Money Arrow via Shutterstock

Boosting credit unions could play a key role in driving loan sharks out of London, according to a new report.

Liberal Democrat London Assembly Member Stephen Knight's report - 'Payday London' - recommends that Mayor Boris Johnson tackles the problems of illegal and payday lending by actively supporting the growth of credit unions with low and capped interest rates.

The report’s recommendations include calling on the Mayor to open a credit union savings account for every secondary school starter. It also calls for the Mayor to actively encourage Londoners to join a credit union and for him to take a lead in ensuring regulations are changed to make payday loan shops require specific planning permission.

Stephen Knight said: “It is a harsh fact that where credit exclusion is greatest, payday companies and illegal loan sharks thrive.

“Borrowing is a reality of life for many people on a low income, but if people have no access to credit at low interest rates they are often driven into the hands of loan sharks.

“Despite Londoners having such an immense need for affordable lending the reach of credit unions is far less than in many other cities. At present just one per cent of the London population belong to a credit union, compared to 3% in Merseyside and 5% in Glasgow.”

“It is high time the Mayor understood and monitored the problems caused by payday lending in the capital and invested in and promoted credit unions so as to curb the growth in payday lending and to drive out loan sharks from London.”

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