In a House of Lords debate about the impact of debt on families, Dr Rowan Williams said the Government should do more to protect the poorest and most vulnerable in society. He said credit unions had enormous potential to achieve this.
“The work of credit unions is still all too little known in most of the UK, although there are some 172 million members of credit unions worldwide, and more than a quarter of the populations of the United States, Canada and Australia are members. The potential is enormous,” stated Dr Williams. “It is evident at the simplest level in terms of the financial burden involved in the arranging of a loan: the credit union makes no charges for arranging this, includes loan insurance at no extra cost and has no penalties for early repayment.
“Even the most reputable home credit company — and there are many others — will be about a third more expensive than a credit union.”
Dr Williams, a member of the District of Canterbury Credit Union, hopes the forthcoming legislation for the sector, will help expand credit unions to the poorest parts of the UK.
He commented: “The encouragement of locally based, entirely trustworthy, user-friendly, educationally sensitive and confidence-building methods of managing debt should be among Government’s highest priorities in combating the poverty traps.
“A review is under way of legislation on credit unions and other co-operative ventures.
“It is much to be hoped that fresh legislation will bring increased flexibility by, for example, enabling credit unions to work with corporate members—small family businesses, religious groups active in community work, local co-operative networks and so on—and giving the option to members of paying interest on continuing savings retained in the credit union, rather than receiving a dividend. The latter would have an enormously positive impact on the further development of child trust funds and similar arrangements.
“Furthermore, a broadening of the definition of a common bond area to enable the services of a credit union to be shared across different localities would help these organisations to move more effectively into neighbourhoods where there is no accessible credit.
“All these new liberties might make the credit union movement in due course as significant a presence in our credit economy as it is elsewhere — bearing in mind that the pressures arising from our current crisis will not be exclusively a matter of concern for the poorest sectors of our society.”
Mark Lyonette, Chief Executive of ABCUL — the Association of British Credit Unions — told the News: “We are pleased the Archbishop of Canterbury has drawn attention to the important role that credit unions can play in helping to alleviate the impact on the family of economic inequality, credit and debt.
“We also welcome his support for legislative change to enable credit unions to have a much greater impact and much wider coverage.”