More tenants will now be able to access affordable finance thanks to the introduction of new credit union powers.
The new rules, which came into effect last week, allow all of a housing association’s tenants and employees to join one credit union, no matter where they live or work.It means a credit union can now provide services to all the employees and tenants of a housing provider, even if many of these people live outside the area currently served by the credit union.
In addition, credit unions will also now be able to pay interest on deposits, instead of a dividend, helping to mobilise community savings.
The Hyde Group, which already works with 12 credit unions on a number of resident-based initiatives, said the changes would result in more tenants being able to access affordable finance. Jahanara Hussain, Hyde’s financial inclusion manager, said: “Credit unions offer excellent banking, saving and lending alternatives, and these changes will help more residents to use them.“Until now residents could only join credit unions which operated in their local area, and this meant they were out of reach of many of our rural residents.”
The new rules, which make it easier for credit unions to offer services to more members and communities, is already having an effect.It has been reported that a credit union in Wales is using the new powers to help inmates at a prison near Bridgend save money for their release.
Speaking to 24dash last month, Mark Lyonette, chief executive of the Association of British Credit Unions (ABCUL), said credit unions could also play a key role in the delivery of the Government’s Universal Credit reforms. From 2013, social housing tenants will receive their benefits, including housing benefit, directly instead of it going straight to their social landlord. Mr Lyonette said housing associations are keen to work with unions who provide ‘benefit direct accounts’ where tenants can elect to have benefits paid into their union account, but where the housing element can be paid to the landlord before it’s withdrawn by the tenant.Some unions already provide the product for a number of private landlords.He said unions are already working with groups of housing associations all over the country and in Scotland on a solution.
He told 24dash: “They are working on similar things, namely – is there a way in which we can extend the service some credit unions already provide in this regard, so they can get, if not a complete guarantee that the money will find its way to the landlord, a lot higher percentage and at a lot lower risk for people.”