The Developing Role of Credit Unions’ in The Scottish Lending Market
October 2017

With National Credit Union Day approaching we discuss the growing popularity of Credit Unions’ in today’s lending market. These community centric organisations aim to provide a financial institution where all members mutually benefit when saving or borrowing through them. They are open to everyone from all financial backgrounds within their community, whether this is formed from the common factor of living in a local area, working in the same industry or belonging to particular trade union.

Over 7% of the Scottish population are now opting to be a member of a Credit Union, however a large number of these members are those struggling to qualify for high street borrowing. It is becoming apparent that as ordinary banks continue to increase their capital reserves and restrict access to credit that credit unions are becoming a welcome alternative to high interest pay day loans. When comparing the APR’s of Credit Unions and pay day loan companies it is apparent why people from modest means are increasingly opting to borrow from the their local Credit Union. The figures from recent media adverts run by leaders in the pay day lender market show current rates ranging from 1277% - 1575% APR.

Credit Unions willingness to make small loans (£50-£3,000) which the majority of high street banks wouldn’t do also increases their appeal. Some Credit Unions can even provide the money to their members on the day of application. These organisations however are based around only providing people with a loan which they are capable of affording the repayments on.

Our Credit Union client base here at Alex M Adamson is growing, which reflects not only the increased use of these organisations as a smart lending choice for those on lower incomes but also supports the personalised approach we take here at AMA. Our extensive knowledge of the market that Credit Unions are operating in allow us to create a tailored collection approach to suit each of our Credit Union clients.

Vale of Leven Credit Union Ltd’s director discusses how AMA’s tailored methods have helped recoup their outstanding debts:

“We have been using AMA services for nearly 5 years and over this period they have managed to recover just under 50k of irrecoverable bad debts. AMA give a professional yet friendly service, their team is approachable, knowledgeable and we have benefited from the close working relationship we have together.”