Meeting of the Parliament 17 September 2019
As has been said, the debate has been very consensual, which is not always the case. We have heard from members across the chamber that a credit union is a not-for-profit, co-operative financial body that loans at low interest rates and offers saving services to people who would otherwise struggle to gain access to credit. The key elements are that it helps to build and improve credit ratings, that it provides financial education and that it helps to develop money management skills.
The words “ethical” and “affordable” were in a lot of members’ speeches, including those of Ruth Maguire and Pauline McNeill. We all recognise that we need access to credit—I am sure that most of us, at some point or other, have approached our bank and asked for financial help. It is something that we take for granted. If we asked people on the street where they would go if they needed financial help, they might say the bank, or they might talk about approaching family. They might even talk about payday lenders or selling goods to free up some cash. However, surprisingly few of them would suggest using a credit union, and everyone in the chamber agrees that that must change.
Credit unions support people who are struggling with financial management or experiencing short-term hardship. I was not particularly aware of credit unions until I visited my local credit union, earlier in my time in this place. That credit union has been invaluable in helping me to help my constituents who come through the door. Several of my constituents have benefited from the intervention of a credit union. I particularly want to mention a young lad who is still in his 20s. Because of trauma in his early life, he ended up with drug addiction and in jail. To his eternal credit, he is out there, trying to take control of and take responsibility for his life by trying to make a home where he can bring his children to visit. Part of his solution fell within the credit union. These small stories, which we all know, give us an idea of why it is so important that credit unions continue and flourish.
I welcome the Scottish Government’s announcement of £10 million in new funding for credit unions. However, as Andy Wightman said, it is not just about strengthening the balance sheets; it is about looking at the digital and fiscal offer, to promote credit unions more widely. In Scotland, we have a high uptake of credit unions compared to most places in the United Kingdom, but Northern Ireland is showing us the way forward.
At a time when more banking services are moving out of town centres and going online, credit unions have the potential to step in and fill some of the gaps. Visibility and awareness are key to making credit unions successful and viable. They need people who are willing to save and are looking for loans, and they require people to know what credit unions are, where they are and how to use them. As has been said several times, lack of knowledge can drive people towards more unethical sources of money such as high-cost credit services and payday loans, which take advantage of people’s need for support and can make them more sceptical of organisations such as credit unions because they assume that there has to be a catch. It is, therefore, imperative that we continue the development of credit unions.
Unsurprisingly, Johann Lamont spoke about the need for the Scottish Government to raise the profile of financial education in schools. Again, I welcome the Scottish Government’s provision of financial support for the development of the junior saver scheme.
We must also recognise that both Governments are working on this. The United Kingdom Government is toughening up regulations on payday lenders, looking for further reforms in the high-cost credit market and cracking down on unlawful lending and loan sharks. It is also piloting interest-free loans and prize-linked savings schemes, to help credit unions.
There has been a lot of consensus in the chamber today, but we must make sure that there continues to be action. Credit unions are a vital component of Scotland’s financial sector, and their continued expansion can bring real benefit across the country.
15:38