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The
Scottish Executive will underwrite local credit union loans to Farepak
customers.
The underwriting facility will ensure credit unions
can offer loans to individuals who have lost out but are not members as well
as existing members.
Labour MSP Allan Wilson
has welcomed news that the Scottish Executive will underwrite loans from
local credit unions to Farepak customers.
The Cunninghame North MSP says the loans of up to £400, charged at
significantly lower interest rates, means local Farepak customers will not
have to turn to illegal loan sharks or run up credit card bills at
extortionate interest rates.
Credit unions across Scotland will lend up to £400 to those who have lost
out, charging standard credit union interest rates on repayments which are
significantly below commercial rates. It is estimated that there could be up
to 30,000 Farepak customers in Scotland.
The underwriting facility will ensure credit unions can offer loans to
individuals who have lost out but are not members as well as existing
members.
Speaking about the announcement, Allan Wilson MSP said: “The Farepak
collapse has hit hundreds of local hard-working families and Christmas is
likely to be a lot tougher this year as a result”.
“I welcome today’s announcement that the Scottish Executive will underwrite
loans – I hope this will encourage those families who need help to use
credit unions and stop them from using loan sharks or high interest credit
cards.
“Credit unions are already helping their members who were also Farepak
customers but today’s announcement will enable them to do a lot more.”
Notes:
1. The Executive has pledged to underwrite the loans up to the value of £400
to Farepak customers from credit unions. Interest on the loans will be
charged at the standard credit union rate. The period of the loans will be
decided on a case by case basis with each client.
2. Glasgow City Council had announced a scheme to help local people who by
joining a credit union in the usual way and providing evidence of having
been a Farepak customer, could be offered loans of up to £400. Today’s
announcement means the Executive will underwrite this scheme and similar
credit union schemes already underway.
3. It is estimated that there are 150,000 Farepak customers in the UK, with
up to 30,000 of them in Scotland.
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