Credit Unions

Question Time — Scottish Executive – in the Scottish Parliament at 2:30 pm on 13 March 2003.

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Photo of Johann Lamont Johann Lamont Labour 2:30, 13 March 2003

To ask the Scottish Executive what support it is giving to credit unions. (S1O-6637)

Photo of Des McNulty Des McNulty Labour

The Executive is providing £1.5m over the three years to 2004-05 to help to implement "Unlocking the Potential—An Action Plan for the Credit Union Movement in Scotland". Our funding is helping credit unions to comply with the Financial Services Authority's regulatory requirements and to increase their membership and the services that they offer.

Photo of Johann Lamont Johann Lamont Labour

I acknowledge the important and increasingly effective role of credit unions in my constituency and elsewhere. What support has been given to credit unions to play a role in the important money advice function that the Debt Arrangement and Attachment (Scotland) Act 2002 created? What support is given to school initiatives, such as the one in my constituency, that aim to develop good saving habits in our primary school children?

Photo of Des McNulty Des McNulty Labour

Credit unions can help their members avoid the need for the last-minute solutions in the Debt Arrangement and Attachment (Scotland) Act 2002. Low-cost loans, affordable forms of credit and the other financial products that they offer all help people to manage their finances better and avoid getting into debt.

We are keen for credit unions to encourage children to start the saving habit early. Many credit unions already do that. Capital Credit Union and Craigmillar Credit Union both have junior saving schemes. We are keen for other credit unions to extend those schemes and we will consider how they can provide them.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

Is the minister aware that, since the advent of the FSA, it is more difficult to set up a credit union? Will he also explain how, when—as shown in a parliamentary answer—the Executive does not hold information centrally, it can promote new credit unions?

Photo of Des McNulty Des McNulty Labour

I have had meetings with the Scottish credit union partnership—SCUP—and other credit union providers. Margaret Curran has had such meetings as well. We have provided significant support to credit unions in the past two years, which has allowed credit unions to start up, kept them in existence and allowed some of them to expand their services. We will continue with that approach.

Clearly, we need to work with individual credit unions and credit union representative associations to improve the information base on how credit unions operate and what services they currently provide; then we can help more of them to learn from one another. We will continue to do that work.

Photo of Lyndsay McIntosh Lyndsay McIntosh Conservative

Can the minister tell us, with reference to his negotiations with SCUP, what research has been undertaken on the effectiveness and stability of credit unions?

Photo of Des McNulty Des McNulty Labour

I am sorry, but I did not hear the question.

Photo of Lyndsay McIntosh Lyndsay McIntosh Conservative

Can the minister comment on the stability and effectiveness of credit unions, in the light of any research that the Executive has undertaken on them?

Photo of Des McNulty Des McNulty Labour

One of the reasons why we are providing funding under the "Unlocking the Potential" action plan is to support the health checks and business planning that is taking place within credit unions. Throughout Scotland, credit unions—in company with SCUP and, in some instances, local authorities—are considering how they can meet the FSA's requirements and how they can sustain themselves as effective businesses. The best method of doing research is to carry on with those financial health checks and to establish, in partnership with the credit unions, what support is needed and how best it might be provided.