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Credit union takes on pay-day lenders

Blackpool Fylde and Wyre Credit Union are set to move in to these premises on Birley Street in Blackpool. Below: Jeannette Sharratt.

Blackpool Fylde and Wyre Credit Union are set to move in to these premises on Birley Street in Blackpool. Below: Jeannette Sharratt.

It may look modest and unassuming, but this small shop unit on Blackpool’s high street is set to become the latest weapon in the war on pay-day lenders and loan sharks.

For the successful Blackpool, Wyre and Fylde Credit Union is to take the bold step of moving into the town’s main financial district in Birley Street – and take on the banks and doorstep lenders.

Banks including Natwest, Barclays and HSBC already trade on Birley Street, along with the Skipton Building Society, while Lloyds is round the corner on Corporation Street.

There are also two short-term loan companies - the Cheque Centre on Birley Street, and the Money Shop on Abingdon Street facing down into Birley Street.

Now Blackpool Council is proposing to buy a former travel agents to rent to the credit union so it can move from its current offices within Coastal Housing, also on Birley Street.

It comes after latest figures, gathered by the Step Change debt charity, show Blackpool residents owed an average of more than £18,000 as they struggled to cope with the rising cost of living.

Credit unions were established to offer people who were turned down by the banks for loans, an alternative to being forced to borrow from pay day lenders, or even from loan sharks, who charge huge rates of interest.

Coun Simon Blackburn, leader of Blackpool Council, said: “This would be a fantastic move for the Credit Union.

“If approved by the Executive, it would mean a real presence in the town centre for them.

“Not only will a shop bring in more customers to the Credit Union, but it will also make people aware of this much more reasonable alternative to high payday lenders.

“People need to know that there are other options available if they need a loan. The credit union offers affordable interest rates that people can pay back without the fear of them escalating out of their control.

“We’ve been working towards a town centre shop for a while now, and expect that its appearance will be a financial support for our residents.”

Many who go down the loan shark route people cannot pay back the debt and end up tipped into a spiral of indebtedness.

Mike Barry, operations director at the Blackpool, Wyre and Fylde Credit Union, said: “If we can sit there right on the street between the banks, building society and short-term lenders, with our own visible presence we believe we can help more people who want an alternative.

“At the moment we are in a back office, and we are not accessible.

“This will mean anyone can come in off the street and talk to us about their financial situation in comfortable surroundings. We think sitting right in the middle of where all the other financial providers are, and saying here is a not-for-profit alternative will help people.

“Since the banking collapse four or five years ago, there has been scandal after scandal among the financial institutions. I think people are getting tired of it and saying if there is a not-for-profit alternative that helps our local economy, then they will be drawn to it.”

At the moment credit unions can only offer savings and loans services, but are expected to expand their services in the next couple of years.

Around 4,000 people are currently members of the Blackpool, Wyre and Fylde Credit Union which is owned by its members and last year paid out a dividend of three per cent.

Members have accumulated savings of almost £1.8m and the credit union has issued more than £4m in loans since its launch four years ago. It is estimated this has saved members £2.5m in interest payments when compared to the same average loans through doorstep lenders.

Credit unions can also offer considerably lower interest rates than many banks - as interest on credit union loans is limited by law, so members never pay more than two per cent in interest per month and many loans may be lower.

The APR (annual rate of interest) is capped at 26.8 per cent, compared to around 272 per cent APR routinely charged by short-term lenders. Blackpool Council has provided £60,000 towards fitting out the proposed credit union premises, which has been topped up with a grant from the Barclays Bank community fund.

The council is also proposing to borrow nearly £300,000 to buy the Birley Street property to rent to the credit union, with the rent being used to pay off the loan over 20 years.

A report to the council’s executive, which will consider the scheme at its meeting on Monday, says “Birley Street has been identified as the preferred location” because it is close to the council offices and “to the established banking and shopping areas, and also to several high interest lending companies.”

Jeanette Sharratt, 70, and her husband Frank, who died earlier this year, ended up £100,000 in debt after they borrowed £2,000 from a doorstep loan shark in 1987.

Mrs Sharratt, of Grasmere Road, said: “I would say don’t borrow money from anyone. If you haven’t got the money, do without.

“A lot of people will be very sorry they borrowed money for Christmas, when they cannot pay it back.”

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