Credit unions unveil training plan
Credit union staff are to be trained in the same way as banks and building societies to boost confidence that the savings they hold are protected by a consumer compensation scheme.
The credit union sector hopes to rapidly expand and attract up to one million new members by 2019 after being handed a contract to provide an alternative to high street banks and payday lenders.
Bodies representing credit unions have agreed to adopt the training programme to help their front-line staff and volunteers explain to their members that their money is protected by the Financial Services Compensation Scheme (FSCS).
The training programme is already used by banks and building societies including Nationwide, HSBC and Royal Bank of Scotland as part of their employee training.
The UK's savings safety net protects up to £85,000 of people's cash if a financial institution such as a bank, building society or credit union goes under. It has already helped more than 4.5 million people and paid out more than £26 billion in compensation.
Ace Credit Union Services, the Association of British Credit Unions Ltd (Abcul), UK Credit Unions, the Irish League of Credit Unions, the Scottish League of Credit Unions and the Ulster Federation of Credit Unions have all confirmed they intend to encourage members to take the training.
In total, the trade bodies represent over 500 credit unions, which already serve over one million customers and hold more than £100 million in savings and deposits.
Mark Neale, chief executive of the FSCS, said: "We have been working with major firms, including their relevant trade bodies, to get them to do more to increase awareness about FSCS protection.
"As the credit union movement grows in the public consciousness it is vital that consumers know any savings they have with an authorised credit union are protected in the same way as any bank or building society account."
Credit unions are mutual financial co-operatives that take deposits and give loans to members. The sector in Britain is still relatively small compared with countries such as the United States and Canada. Credit unions in the US serve almost one third of the country's population.
The Government is encouraging the sector's growth to help people who often find themselves shut out of mainstream borrowing and recently awarded a £38 million contract to help credit unions beef up their presence.
Credit unions plan to use this to modernise and expand their product ranges, enabling more members to access products such as current accounts and cash Isas using the internet and mobile phones.
A recent Government report said that up to seven million low income earners who pay a ''poverty premium'' for credit from lenders including loan sharks and the payday lending industry could be helped by the growth of credit unions.
Mark Lyonette, chief executive of Abcul, said: "Ensuring credit union staff have the information they need about the compensation scheme helps them to ensure members have confidence in the services they provide."