Over recent weeks the media has highlighted  a morally-bankrupt lending industry with pay-day loan companies being accused of  mis-selling and low-earners being charged 150% more for household goods on the high street.  Recent survey results from Shelter have shown that over 1 million people have taken out a pay-day loan to help pay their mortgage or rent in the last 12 months.

I have long been an advocate of credit unions. Credit unions have been promoted for many years within  NHS, Police and emergency services staff rooms as they offer low cost loans whilst encouraging savings to grow at the same time. Any profit stays within the organisation and the credit unions are regulated by the FSA meaning the first £85,000 of savings are safe should they fail.

The main changes just announced will mean savers and borrowers stand to gain as credit unions can now offer a viable alternative to banks. It will now be easier to become a member as joining rules are being relaxed, i.e. membership will not be restricted to certain occupations as mentioned above. Membership will no longer be limited to individuals but open to community groups, social clubs and local authorities. Credit unions will now be able to pay interest on savings rather than a dividend linked to annual performance and we should see these rates being published on best-buy tables making it easier for members to compare their credit union with banks and building societies.

Credit unions have not taken off in a big way in the UK in contrast to being a huge success in countries such as Australia, Ireland and the United States. I think if local groups and agencies such as Citizens Advice Bureaux, housing associations and local authorities could work in partnership with credit unions to promote their services, we could see more of their branches open in the high street and outreach services provided in the more rural areas. Judging by the local statistics for people currently accessing debt and money advice, they would get a huge welcome.