Published July 2012
Credit Union Expansion
The DWP Growth Fund increased access to affordable credit through credit unions and other contracted third sector financial suppliers from August 2006 until March 2011.
Credit unions have made substantial progress in recent years to increase access to financial services and loans to people on lower incomes, but more needs to be done to secure credit union expansion and modernisation to the point where they serve a million more people and become sustainable.
DWP managed a feasibility study to examine the scope and options for the modernisation and expansion of credit unions which was published on 10 May 2012.
How DWP will help increase access to financial services and loans
On 27 June it was announced that the Government will take forward the findings of the Feasibility Study. (423KB) In particular, the DWP will make a further investment of up to £38 million over the next three years in credit unions. This investment, which is in addition to the £13 million invested in 2011/12, will be conditional upon the credit union industry meeting a number of agreed milestones for collaboration, modernisation and expansion.
The aim will be to support the sector to provide financial services for up to one million more consumers on lower incomes, and do so in a way that enables credit unions to modernise, expand and become financially sustainable.
In addition to DWP investment in modernisation and expansion, HM Treasury, and the Department for Business Innovation and Skills plan to consult on raising the cap on the interest rate that credit unions are permitted to charge on loans.