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Farron calls for more support for Credit Unions

June 17, 2013 1:56 PM

South Lakes MP Tim Farron has called for more support from the government and councils for credit unions.Tim's call comes after a report was released this morning by think-tank Civitas. Civitas have suggested that credit unions should be allowed to take bigger deposits if they are to become a viable alternative to high-cost lenders. Credit unions are financial co-operatives that operate in local areas, offering small loans to members.

The government has been encouraging growth in the sector as an alternative to expensive payday lenders. From April next year, the maximum interest rate that can be charged by the unions on loans will be increased from 2% to 3% a month.

Currently credit unions often make a loss on loans under £1,000 because of the admin fees involved. Tim is supporting recommendations in the Civitas report like removing the £10,000 cap on the amount of money that businesses can place with credit unions, by doing that they can attract bigger deposits and allow them to help and support more people on low incomes.

Tim has previously signed the pledge to join the South Lakes Credit Union.

Tim said: ""Credit unions are owned and controlled by their members and are run by and for local people not for profit. I would like the government to enact small changes to support credit unions. But councils can also offer practical help and support to credit unions as they get going throughout our area."