Figures from the Bank of England show that credit unions are lending record sums to UK customers, as the cost of borrowing continues to rise.
Analysis of the Bank figures for the third quarter of 2022 by Freedom Finance shows that total borrowing reached £1.92bn – up £255m (15%) on the same quarter in 2021, and up £51m from the previous quarter.
The UK credit union sector has 1.94 million members, more than 38,000 higher that the same period in 2021, the latest Freedom Finance Credit Monitor adds.
Average household quoted rates on credit cards hit 22.46%, their highest levels since 1998, while personal loans posted their highest quarterly increase of all time in Q4 2022.
Freedom Finance CEO Emma Steeley said: “Credit unions play a critical role in plugging this gap but they remain poorly known and understood.
“This is why it is so important that the industry continues to beat the drum for all providers – including credit unions – who are able to broaden access to the credit market and help more people benefit from more products which are suitable for their circumstances.”’
Robert Kelly, CEO of the Association of British Credit Unions (Abcul) said evidence of the growth of the sector was “encouraging”.
“Our sector continues to gather pace as more people from all walks of life trust credit unions,” he added. “Credit unions offer safe savings and access to affordable and ethical credit facilities alongside access to a range of associated products and services, however they are bound by legislative framework that was originally implemented in 1979.”
Kelly said Abcul has been “lobbying hard behind the scenes for many years” with legislators and regulators for a major reform of the Credit Union Act 1979, and in result, “a more enabling legislative framework will be delivered by April/May 2023”.
New legislation – announced at last year’s Abcul conference by Treasury minister John Glen – will give credit unions the opportunity to provide car finance under Hire Purchase (HP)/Conditional Sale/PCP arrangements, and general insurance products and services.
This will bring “a hugely exciting time for the credit union sector”, said Kelly, enhancing its “ability to serve many more consumers across the country and to serve a wider share of the financial needs of households and communities”.
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