Leeds council bosses have signed a new long-term partnership with the city’s credit union, as the two organisations join forces to tackle the £90m high-cost lending market.
As part of the new enhanced deal, the council is extending the repayment terms of its £1m loan to Leeds City Credit Union to 10 years, from the three years left on the current agreement.
The two organisations will also team up on a raft of new initiatives to help some of the city’s neediest families.
The council had bailed out the union in 2009 after some high profile cash flow problems fuelled by the financial activities of a former manager, which came to a head in 2008.
However the organisation has had a major turnaround since then, and has been a vital part of the city’s trailblazing work tackling the payday loan and illegal lending market.
Membership has tripled in the past 10 years to 33,000 and the loan book is currently £8m.
A report just approved by Leeds City Council’s decision-making executive board says: “The credit union has an ambition to build its loan book to £20m in order to make a material impact on the estimated £90m high cost lending market in Leeds.
“In addition to reducing the market share of the high cost lenders, the plan would also see a considerable additional saving for households and the local economy and further build the capacity of the credit union.”
Councillor Debra Coupar, executive member for communities, said: “Working with Leeds City Credit Union in recent years means we’ve been able to offer hard pressed families who don’t have easy access to affordable banking services a genuine alternative and support to put them on a sound financial footing.
“Building on this success, our enhanced partnership with the credit union will go from strength to strength, making them the go-to organisation for advice and loans and ultimately offer a real challenge to the predatory high cost lending market.”
Planned future initiatives include providing mortgages and helping people save for a deposit on a home.