Community grant will help to protect Swindon people from loan sharks

A new IT system funded by Wiltshire Community Foundation grant will help to keep people out of the clutches of loan sharks and payday lenders.

Wiltshire and Swindon Credit Union has been awarded a £5,000 community grant to invest in a new system that will allow it to expand its membership and introduce new technology to make saving easier.

Chair Nick Gallop said the new system was desperately needed, and added: “Having this grant will make a huge difference to us and we are very grateful.

"It means we can get on with replacing our current IT much more quickly. Not having the grant would have slowed us down considerably.”

The grant comes at a time when the charity, which lends around £1 million a year to 2,500 active members, is seeing a steady rise in demand, with a 30 percent increase in lending in the last year. Members open savings accounts and, provided they meet loan criteria, can take out loans

Its most popular product is its Family Loan, which requires members to have their Child Benefit paid into their savings account. They can then take out a maximum £500 loan and the credit union takes its weekly repayment direct from the benefit before passing on the balance the same day.

The charity wants to offer the same service to recipients of Universal Credit but needs a better system to do so. 

“Family Loans are mostly to women because they are usually who the Child Benefit goes to,” said Mr Gallop. “By expanding the service to Universal Credit we can lend to men and women equally, expand our audience and serve a much bigger proportion of the population.”

He added that the loans were a vital lifeline to families faced with an emergency and no other means of raising the money. 

“There’s an extraordinary 40 to 50 percent of people who generally can’t get a loan from a bank,” he said. “They can get a basic account but they can’t have an overdraft or a loan, so if their fridge breaks down and they need to replace it what alternative do they have?

“We are the alternative. It’s not a cheap loan but it’s 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 percent, or a hire purchase scheme where you are paying 150 percent interest.”

The credit union works with England’s Illegal Money Lending Team to report loan sharks who prey on people in desperate financial circumstances. 

Mr Gallop said: “We don’t see it at first hand but some of our members do talk about them as alternatives. There are areas in 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 and by definition they are not documented because many people who use them are too scared to talk about it.”

The charity, formed in 2016 from four separate credit unions across Wiltshire, is based in Cavendish Square, Swindon, but is gradually reopening its 15 collection points across the county after they were closed during the pandemic.

Mr Gallop said the cost of living crisis facing families on low incomes is forcing it to take fewer risks when approving loans. He added: “When we get an application we ask people what they pay for gas, electricity and rent; but obviously they tell us what they are paying now, not what they’ll be paying in the summer so we are having to be more cautious.

“But we want to help more people if we can. For people facing an emergency we see ourselves as the last good resort.”

Wiltshire Community Foundation joint chief executive Fiona Oliver said: “The generosity of our donors allows us to fund work like this. We are delighted that the grant is going to make a difference to many people on low incomes who need to raise money for unexpected, like replacing a washing machine, repairing their car or buying school uniform.”

Details of the services provided by the Wiltshire and Swindon Credit Union can be found at wascu.co.uk. The community foundation's website is wiltshirecf.org.uk