A community bank in Middlesbrough town centre to challenge pay day lenders has been recommended by council chiefs.
A new community bank to be based in the heart of Middlesbrough is at the core of Labour mayoral candidate Cllr Dave Budd’s campaign to secure the position in May, when current Independent Mayor Ray Mallon will step down.
Deputy Mayor Cllr Budd, Executive member for finance and governance, has recommended in a report to be put before the Executive on Tuesday that Moneywise Community Banking be provided with a two-year grant totalling £85,000 to support its plans to locate to a town centre premises.
It aims to help over three years 4,000 new members, provide 1,200 training courses and issue loans amounting to just over £0.5m.
A loan from Moneywise of £300 with a typical APR of 26.7% over 12 months, the total repayable amount would be £342.79.
In comparison, the council report states the same loan from a doorstep lender (APR 272%) would cost £546 to repay; from an online instant loan (APR 1058%) it would cost £627.54 to repay; and from an illegal lender or loan shark (APR 1000%), it would cost £2,900 to repay.
Moneywise Community Banking – a not-for-profit member owned credit union – will deliver a number of financial support services including safe and easy savings; an optional Visa debit card service; low cost loans; Christmas savings club; white goods and furniture at discounted prices; free employability training; and debt and money management advice.
It was originally based in Hartlepool and now operates across Teesside, East Durham and North Yorkshire with offices in Redcar, Hartlepool and Scarborough. It is regulated by the Financial Services Authority and the Prudential Regulation Authority, which is also the case with banks.
All member savings within Moneywise are fully protected by the Financial Services Compensation Scheme so members can save safely in the knowledge that they cannot lose their savings, the report said.
Cllr Budd has said previously that a “modern, effective” credit union for Middlesbrough has to be “competitive and give an instant answer like companies such as Wonga do”.
“This has worked elsewhere and it can work in Middlesbrough. It will offer credit at fair rates and gives all Middlesbrough residents the opportunity for greater financial security.”
The report states that the two-year £85,000 grant would be funded through existing resources within the Community Support Fund.
Moneywise and Middlesbrough Council would work together to identify suitable premises.
Source – Middlesbrough Evening Gazette, 14 Jan 2015
A drive to keep people in Jarrow out of the hands of loan sharks and payday lenders has been launched – thanks to a £20,000 Lotto grant.
The cash will help raise awareness of the town’s existing advice drop-in centre at Jarrow’s Grange Road Baptist Church.
The church currently plays host to The Bridges – Your Community Bank, the trading name of South Tyneside Credit Union.
The grant, from Big Local, part of the Big Lottery Fund, will help increase sessions at the church and encourage better money management in central Jarrow.
The two-year programme will also help people looking to escape the cycle of sky-high interest rate loans.
One key element will be the creation of four savings clubs in schools, nurseries and children’s centres, to teach youngsters about saving.
Last year the bank issued 989 loans, payable back within a year, and typically for between £800 and £1,000, and totalling around £845,800, at interest rates from 5.1 per cent APR and 43.8 per cent – far lower than any payday lender.
But bosses believe the partnership has the potential to encourage many more people to approach them for safe, well-planned and responsible financial support, and for loans which reflects their ability to repay.
Janette Wynn, manager of Bridges – Your Community Bank, said:
“This partnership is an important development in helping people to get away from using either payday lenders, or doorstep lenders.
“It will raise awareness to residents that credit unions are another alternative source of borrowing instead of using payday loans and door step lenders.
“It will help adults by offering loans at far lower interest rates than they may otherwise pay, and it will also encourage them towards more responsible borrowing.”
Anne Corrigan, project co-ordinator for Big Local in Central Jarrow, added:
“This will help people to access affordable loans, reducing the numbers reliant on pay day loans and loan sharks and ultimately improving the economic stability of the community.”
Loans are typically used for home improvements, holidays, Christmas expenses, buying a car, and debt consolidation.
More information is available from Bridges – Your Community Bank on 0191 454 7677 or by emailing email@example.com, or from Anne Corrigan on 0191 428 1144 or by emailing firstname.lastname@example.org,uk
Source – Shields Gazette, 31 Oct 2014