Providing Access to Affordable Credit in the Highlands

The Highland Council’s Resources Committee is backing plans to investigate  further the feasibility of creating a pan-Highland credit union to provide access to affordable credit across the Highlands. Committee members were presented with the findings of a study which examined the best way to provide affordable credit in Highland.  The study recommended that a pan-Highland credit union would be the best way to achieve this in Highland but should be provided alongside financial education and pro-active money advice.

The study was overseen by a multi-agency group comprising of the Council,
Albyn Housing Association, Citizen’s Advice Scotland, Highland Opportunity Ltd and both of the existing Highland Credit Unions in Inverness and Lochaber.

The study established that there was a need for a mechanism through which to provide affordable credit as:

• 9% of the sample had no bank account;

• 45% reported that they did not save;

• A quarter of those currently taking some form of credit were not able to meet these payments;

• There were very low levels of awareness of the cost of debt;

• 10% reported that they had been turned down for a loan with the principle reasons for this being a poor credit history or the lack of a credit history;

• 40% of the sample indicated that they had trouble accessing affordable credit with the reasons for this being a lack of income, not knowing where to go and a poor credit history;

• There is no mainstream credit provider providing small loans of under £1,000 across the Highlands.

Committee members agreed to contribute £6,000 towards the cost of progressing the proposal, by identifying detailed costings and operational requirements.  The outcomes of this further work will be reported back to the Committee before it considers how best to proceed.

Councillor Carolyn Wilson, Chairman of the Council’s Resources Committee, said: “We are all aware of the impact of the recession and the evidence of the recent study, combined with the experience of our money advice customers, clearly supports the business case for developing a pan-Highland credit union.  Hopefully it will deliver affordable credit to people on low incomes and those experiencing difficulty in getting credit. It will also promote a culture of saving and provide close links to financial advice and education.”