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The sense
of injustice experienced by Farepak customers has struck a chord right
across the country.
The Executive has pledged to underwrite the loans up
to the value of £400 to Farepak customers from credit unions.
The Executive is to
underwrite the cost of loans from local credit unions to Farepak customers
let down this Christmas by the company's collapse, it was announced today.
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.
Allan Wilson said: "The Farepak collapse has shown that Scotland can come
together as a community, with tremendous support from many businesses and
employers”.
"The sense of injustice experienced by Farepak customers has struck a chord
right across the country. These people followed the rules and saved for a
one-off expense but still lost out”.
"I applaud the individuals and organisations who have donated their time and
money to the campaign for justice for Farepak customers, and I am pleased to
announce that the Executive has agreed to underwrite the cost of loans to
customers, to help them rescue something from this Christmas”.
"The credit union movement in Scotland has been leading the way for many
years offering money advice, encouraging saving and delivering a range of
services”.
"Credit unions are well established in communities across Scotland and we
are aware that some have already been helping their members who were also
Farepak customers. Today's announcement will enable them to do a lot more."
Background:
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 standard credit union rates. The
period of the loans will be decided on a case by case basis with each
client.
Credit Unions will be required to maintain separate documentation of loans
to Farepak customers and to undertake their usual procedures to prevent bad
debt. They will then be eligible to claim defaulted payments from the
Executive up to a total of 5% of loans made.
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.
It is estimated that there are 150,000 Farepak customers in the UK, with up
to 30,000 of them in Scotland.
A full current list of known credit unions in Scotland will be available at
http://www.scotland.gov.uk/Topics/People/Social-Inclusion/17413/CU.
Further details can be obtained from ABCUL and the Scottish League of Credit
Unions.
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