A new bill to provide for the establishment of a credit union for members of the armed forces and their families has been presented to parliament.
The bill was introduced by Gareth Thomas, Labour/Co-op MP and chair of the Co-operative Party, in December under the ten-minute rule. A second reading is due to take place on 28 February.
Mr Thomas said: “The bill is designed to ensure that our soldiers, sailors and Air Force personnel on lower incomes have access to low-cost loans and other low-cost financial services and, as a result, are not vulnerable to high-interest payday loan businesses.”
A member of two credit unions, M for Money and Rainbow Saver, Mr Thomas explained the core ethos of the sector. “It is, in essence, about people in the same community looking out for each other but benefiting directly themselves from a service that they are able to provide together,” he said.
Mr Thomas gave examples of other successful credit unions already operating in the UK, such as the police credit union with 21,000 members, the former British Airways credit union, with more than 7,500 staff as members, or the London Mutual Credit Union, with 15,000 member owners. Similarly, in the US, the world’s largest credit union, Navy Federal. serves all Department of Defense and Coast Guard personnel and their families.
“When US soldiers, sailors and marines are on active service duty, they can focus on the day job of achieving their mission and staying safe without worrying about their financial affairs at home. My belief that the British armed forces deserve the same support is what motivates my passionate belief that we need a British military credit union.”
During his recent visit to London, Mark Lawton, vice-president for compliance and public policy at Navy Federal, said he welcomed the idea to develop a similar credit union model in the UK. In his speech at the Parliamentary roundtable called by the all-party parliamentary group of Credit Unions, Mr Lawton said: “We’re proud to be providing valuable, specialised service and products to countless members of the US Armed Forces and their families. It’s exciting to think that a similar model could be developed in Britain.”
The debate on establishing a credit union for the British Armed Forces comes at a time when about a third of British veterans experience financial difficulties facing the prospect of unaffordable levels of debt, according to research by Royal British Legion. Without access to affordable financial services, low-paid service personnel have to turn to payday loans. As a consequence, small loans get bigger and bigger through huge interest rates.
Mr Thomas added: “The idea has a lot of support but we need action to make it happen. I want the bill I have introduced into parliament to be a catalyst for this. We need the Ministry of Defence to back the idea with tangible support including a commitment to implement payroll deduction and some seed funding for set-up costs.”
He also highlighted that many families across the UK are facing the same problem due to a lack of credit unions in their local areas. He called for an expansion in the promotion of and access to credit unions, believing that “a levy on the profits of the payday lenders could help to drive that expansion of low-cost financial services that credit unions offer.”
Abbie Shelton, policy and communications manager at the Association of British Credit Unions (Abcul), commented: “We welcome the support from Gareth Thomas for the formation of a credit union for the armed forces. Mark Lawton from the Navy Federal Credit Union visited in October, and the parliamentary roundtable he attended agreed to set up a working group to explore the idea of a credit union for British service personnel, veterans and their families. We are continuing to liaise with government officials on the feasibility of this and it is great to have all-party support for this valuable idea.”
In this article
- Air Force
- Association of British Credit Unions
- British Airways
- Co-operative Party
- Coast Guard
- Credit union
- Credit unions in the United States
- Department of Defense
- Financial economics
- Financial services
- Gareth Thomas
- Labour/Co-op MP and chair
- London Mutual Credit Union
- Mark Lawton
- Ministry of Defence
- Navy Federal Credit Union
- Payday loan
- Personal finance
- Royal British Legion
- US Armed Forces
- United Kingdom