New union to help offer affordable loan service

Published 24 Jun 2010 08:00 0 Comments

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SAFEGUARDING residents against financial insecurity is part of a new scheme being proposed by the Royal Borough.

The council is looking to set up a credit union borough wide that will help members of the public avoid loan sharks and organisations that charge high amounts of interest.

A report will be presented at the council next week that proposes the expansion of Reading Credit Union. If plans go ahead residents with poor or no credit rating will gain access to low-cost financial services.

Cllr Richard Kellaway, lead member for finance, said: "The current economic situation is hitting people hard. There are those who are finding it difficult to get a loan at all or to get a loan with affordable interest rates.

"In these challenging circumstances they can fall foul of loan sharks or be forced to use organisations which offer loans but with sky high interest rates that will be impossible to pay.

"A local credit union will offer a reliable, affordable savings and loans service which will be part of our community and help local people manage their financial affairs."

The credit union would also offer an ethical savings opportunity for residents who wish their money to be used to support the local community.

Cllr Kellaway added: "It will have the added advantage of contributing to the revival of the local economy by keeping money in the community, with loans potentially being spent in local shops and businesses. This is an all-round good and responsible service for our borough."

Credit Unions are regulated by the Financial Services Agency and encourage people to save regularly. The pool of money is then used to provide loans at affordable rates of interest.

Reading Credit Union, run by volunteers, was set up two years ago.

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