LONDON (4/19/13)--The British government has awarded US$58.1 million to the Association of British Credit Unions Ltd. (ABCUL) to enhance access to credit unions as an alternative to payday lenders and provide greater access for more people to credit unions.
The money will be spent on modernizing credit unions with new computer systems and an infrastructure so they can offer a wider range of products and services to more consumers, said ABCUL (Financial Times April 16).
A June feasibility study indicated that modernizing Britain's credit unions and helping the sector become financially sustainable would allow credit unions to help more than one million people by giving them access to banking products, debt advice and affordable loans, said the Department for Works and Pensions (FTAdviser.com April 18).
Currently about seven million people are trapped by payday lenders in high-interest credit, with some being charged more than 6,000% in interest on short-term loans.
Mark Lyonette, CEO of ABCUL, noted that centralizing and streamlining day-to-day tasks with modern access channels will make credit unions more attractive for many people. ABCUL said it aims for credit unions to attract up to one million more members by 2019 (Credit Today.com April 17).
The government estimated the expansion project could save consumers up to US$1.5 billion.