Credit Unions (Trust Deeds)

Enterprise, Lifelong Learning and Transport – in the Scottish Parliament at 2:17 pm on 9th March 2006.

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Photo of Jackie Baillie Jackie Baillie Labour 2:17 pm, 9th March 2006

To ask the Scottish Executive whether it has any concerns about the impact of trust deeds on credit unions. (S2O-9208)

Photo of Allan Wilson Allan Wilson Labour

We are satisfied that both measures fulfil different, though related, needs. Credit unions supply a preventive measure against debt by providing single-source savings and lending whereas trust deeds offer debt redemption for debts that have been accumulated. The proposed trust deed reform will help creditors such as credit unions by introducing a new minimum payment and a cooling-off period if a trust deed is not protected, so that debtors can examine other options.

Photo of Jackie Baillie Jackie Baillie Labour

The minister will be aware that as credit unions are community-based mutual organisations, they are disproportionately affected by losses through protected trust deeds, whose use has increased dramatically in recent years. I know that he is consulting on protected trust deeds; that is welcome. Will he agree to meet credit unions to discuss their concerns and to consider how protection can be afforded to those important community organisations, which are part of the solution to debt management, not the problem?

Photo of Allan Wilson Allan Wilson Labour

I am aware of the issues that the member mentioned—not least because she has brought them to my attention previously—and would be pleased to meet credit union representatives.

What the member said about the increased use of protected trust deeds is correct. It is generally accepted across the political spectrum and across the industry—if I may call it that—that protected trust deeds, which the previous Government introduced, must be reformed. Given the experience of credit unions in that field, the opinions and advice that they can provide will be useful to us as we move in that direction.