The Labour Party is backing calls for a credit union to be established to stop the exploitation of British servicemen and women by payday lenders.
Following on from the Co-operative Party’s original call for action last month, a motion has been tabled in Parliament calling on the government to establish a military credit union, which has already had success in the United States.
The Citizens Advice Bureaux has said it is dealing with an increasing number of cases and that British armed services personnel and their families being targeted by payday loan companies are facing serious financial problems.
In response, the early day motion tabled by Labour/Co-op MP Gareth Thomas outlines these concerns and calls for government action. He said: “We need to support our soldiers, sailors and their families hit by payday loan problems and a dedicated credit union based on the hugely successful Navy Federal could make a real difference to the quality of life of our armed forces.
“An urgent expansion of credit unions to offer low cost financial services is overdue to help those whose budgets are stretched and for whom a payday lender can mean a fast ticket to increasing debts.”
The motion is also supported by Labour’s Shadow Defence Secretary, Jim Murphy. He said: “We must protect those who protect our nation, whether from undue debt or exploitative lenders. This is an excellent idea which could make a real difference to the daily lives of those who serve our nation.
“Personnel can be vulnerable when transitioning from military to civilian life so everyone who values our Forces should back this new plan.”
Navy Federal is the biggest credit union in the US with four million members of the US armed forces from Navy Seals through to army cooks. With a Board of Directors chaired by a former Rear Admiral, Navy Federal offers loans, mortgages and other financial products which are highly competitive.
In wake of Archbishop Welby’s commitment of the Church of England to helping local credit unions, next month’s Co-operative Party conference will consider a series of measures to help credit unions in the UK expand to match the reach of payday loan companies.
Payday lenders used to target military bases to hook American sailors and soldiers with their high cost financial services. But legislation and the low cost financial products that credit unions offer has led to Navy Federal Credit Union having branches in every military base in the US and offering a very direct and personal service to its members.
Abbie Shelton, Policy and Communications Manager at ABCUL, said: "Payroll deduction is an easy and convenient way for employees to get a savings habit and access affordable credit and we welcome any support for new partnerships which will help more people access credit unions in this way.
"The example of the Navy Federal Credit Union in the United States is a powerful one and we know that there are many people and organisations, including MPs from all sides of the All Party Parliamentary Group on Credit Unions, who are keen to see our armed forces have access to credit union services. We hope that this support will lead to a credit union being established in the near future."
In this article
- Community Financial Services Association of America
- Credit union
- Financial economics
- Gareth Thomas
- Jim Murphy
- Labour Party
- Navy Federal
- Navy Federal Credit Union
- Payday loan
- Payday loans in the United States
- Person Career
- Personal finance
- Social Issues
- United Kingdom