Case Study: Wiltshire and Swindon Credit Union

Wiltshire and Swindon Credit Union received a £5,000 grant through our Community Grants programme. It offers fair and affordable loans to people, often on low incomes, who are unable to get credit other than through expensive pay day loans. Its Chair Nick Gallop explains how the grant is helping the credit union to refresh its ageing IT system, improve the service it offers and launch a new loan scheme for people in receipt of Universal Credit.

“There is an extraordinary 40 per cent plus of people who generally can’t get a loan from a bank. They can get a basic account but they can’t have an overdraft or a loan, so if they have an emergency, such as having to buy a new fridge, repair a car needed to get to work or buy new shoes for the children, what alternative do they have?

“We are the alternative. We don’t do cheap loans but the interest we charge is fair, especially when you compare it to the unknown extortionate lending rate from a loan shark, or a pay day lender where the interest is up to 1,000 per cent, or a hire purchase scheme where you are paying 150 per cent interest.

“We don’t see it at first hand but some of our members do talk about loan sharks as alternatives. There are areas in Swindon and Wiltshire in the bottom ten per cent in the indices of deprivation in the whole of the country and in those areas loan sharks are active. These are nasty people, they operate illegally, they are occasionally prosecuted, but generally they are not documented because many people who use them are too scared to talk about it.

“Our loans are a vital lifeline for families faced with an emergency and no other means of raising the money.

“We lend around more than £1 million a year to 3,000 active members who make a regular commitment to save with us and are able to take out loans, providing they meet our criteria, and repay them monthly. Our main criterion is affordability and we never judge, but we will only lend them what we feel they can afford to repay.

“Our most popular product is the Family Loan: members can borrow up to £500 and use their Child Benefit to make the repayments. Their Child Benefit is paid directly to the credit union, we take the repayment and then pass the balance to them later on the same day.

“The new IT system will let us extend this approach to Universal Credit payments, so we’ll be able to make loans that will help members with housing costs. We’ll also be able to offer a cash-back debit card, and a banking app to give them much more control over the money they save.

Loans are offered mostly to women because it is usually women who receive Child Benefit payments. By expanding the service to handle Universal Credit, we can lend to men and women equally, and not only those with children, potentially allowing us to serve a much larger proportion of the population.”