The 2018 Budget includes a number of packages directed at supporting and promoting the role and work of the Credit Union movement in the Community.
The measures include:
Prized-linked savings scheme pilot for credit unions
Government has announced that it will launch a pilot of a new prize-linked savings scheme for credit unions to boost peoples’ financial resilience through encouraging saving and to raise awareness of the credit union sector.
No-interest loans scheme pilot
For some people, even borrowing from social and community lenders can be unaffordable. Therefore, the government, working with leading debt charities and the banking industry, will launch a feasibility study to help to design a pilot for a no-interest loans scheme early next year.
Dormant assets fund to target access to affordable credit
In August 2018, the government announced that a new independent body would be established to promote financial inclusion. It will be responsible for deploying an initial £55 million of funding from dormant bank accounts, primarily to address the problem of access to affordable credit.
Affordable Credit Challenge Fund
The government will provide £2 million to launch a challenge fund to promote innovative technological solutions that will harness the power of the UK’s world-leading Fintech industry to support social and community lenders.
Breathing space for people in debt
Following the Financial Guidance and Claims Act 2018, the Budget announces a consultation on a breathing space scheme for people in problem debt. The scheme will introduce a 60-day period of protection from creditor action to recover debts to help people make plans to pay back their debts in a sustainable way.
Allow Regulated Social Landlords (RSLs) to refer to sources of affordable credit
The government will simplify regulation to make it easier for RSLs to direct tenants to alternatives to high-cost credit.
The announcements bring long-overdue recognition of the work of the credit union sector within the community at large. The Credit Union’s main trade association ABCUL welcomes the schemes and is consulting with government and its member credit unions about their implementation.