Credit unions can protect vulnerable consumers from loan sharks, says CEO of Leeds Credit Union
Credit unions can play a major role in protecting vulnerable consumers from loan sharks, according to a leading business figure.
Paul Kaye, the new CEO of Leeds Credit Union, said he wanted credit unions to become more mainstream, because he believes their services could transform the fortunes of thousands of consumers.
A new report has revealed that Leeds Credit Union has delivered a social impact worth almost £6 million to residents in West Yorkshire over the last four years.
Leeds Credit Union, which has 37,000 members, is one of the largest organisations of its kind in the UK. In partnership with Housing Leeds, the credit union provides money management and budgeting services to members of society struggling with their finances.
Since 2017, it has enabled tenants from Housing Leeds to manage their bills, become financially stable and reduce their debt levels.
Mr Kaye, who previously worked for Leeds Building Society, said: "We can offer products and services that can assist our members and are not created purely with profit in mind."
Using the Housing Associations' Charitable Trust (HACT) Wellbeing Valuation, it is estimated that the value of benefits delivered to residents by Leeds Credit Union in the last year is more than £3.5m, and between 2017 and 2021 is equivalent to £5.76m.
Mr Kaye said: "Community spirit was so important during the pandemic and we displayed it by keeping our branches open and supporting our members.
"People who previously went to loan sharks and doorstep and payday lenders should be coming to credit unions. But we also want to make credit unions more mainstream.
"They should be there for everyone. If people want to save or borrow why not do it with a credit union that works in the local community, rather than an organisation driven by profit and shareholders? We can lend up to £20,000."
Mr Kaye, who took on the CEO's role in March, said he was keen to ensure Leeds Credit Union works with the Government, regulators and other credit unions to form wider relationships, because he feels the sector could play a vital role in helping the economy recover from the pandemic.
Mr Kaye added: "We can serve a much broader market. If people want to save and borrow ethically, they should use credit unions."
Mr Kaye said credit unions needed support from regulators and Government to help expand their product range.
"We are encouraging people through our payroll saving and lending product to save regularly, which is good for their mental health,'' he said.
"It means there is less illness and absences from work. which benefits the economy as a whole.
"There are an estimated 11.5m people in the UK who have less than £100 in savings. We can help build financial resilience in the UK if we get the support we need. We look at every person as an individual case.
"We don't want to see people falling into a debt spiral and can help get them on a good path.
"Over the last year we have supported 1,000 people through our money and budgeting service in conjunction with Leeds City Council.
Mr Kaye acknowledged that credit unions may also have been slow in terms of boosting their digital capability at a time when payday lenders were making good use of technology.
"We have invested in our technology and people can, if they want, now use us via an app or through our website,'' he said.
"Once people become aware of us, they are likely to use us. We are hopeful new legislation will allow credit unions to offer broader products, so we can, for example offer insurance products and secured loans such as car loans.
"These are huge markets and I can't see any reason why we can't do that. This would allow us to reach a broader market and re –invest in to our business and communities."
"Some of our rivals have to run fast to stand still to grow their loan books as they have shareholders to please. This can lead to poor customer outcomes. But we don't have to do this because we are under no external pressure."
Leeds Credit Union has 40 staff and operates five branches. Mr Kaye said the union wanted to keep growing its reserves to re invest in the business for the benefit of its members.
Mr Kaye added: "I moved to Yorkshire 13 years ago and I've always found people to be down to earth. You know where you stand with them which is very refreshing. When I was at Leeds Building Society my colleagues bought me a mug with Yorkshire sayings - for example, what I had always called an alley was actually a ginnel in Yorkshire. I've always kept this mug to remind me of Yorkshire."