This item was published during the term of a previous administration that ended in April 2007
Listen
Loans for Farepak customers
14/12/2006
The Executive is to underwrite the cost of loans from local credit unions to Farepak customers let down this Christmas by the company's collapse, it was announced today.
Credit unions across Scotland will lend up to £400 to those who have lost out, charging standard credit union interest rates on repayments which are significantly below commercial rates. It is estimated that there could be up to 30,000 Farepak customers in Scotland.
The underwriting facility will ensure credit unions can offer loans to individuals who have lost out but are not members as well as existing members.
Allan Wilson said:
"The Farepak collapse has shown that Scotland can come together as a community, with tremendous support from many businesses and employers.
"The sense of injustice experienced by Farepak customers has struck a chord right across the country. These people followed the rules and saved for a one-off expense but still lost out.
"I applaud the individuals and organisations who have donated their time and money to the campaign for justice for Farepak customers. And I am pleased to announce that the Executive has agreed to underwrite the cost of loans to customers, to help them rescue something from this Christmas.
"The credit union movement in Scotland has been leading the way for many years offering money advice, encouraging saving and delivering a range of services.
"Credit unions are well established in communities across Scotland and we are aware that some have already been helping their members who were also Farepak customers. Today's announcement will enable them to do a lot more."
Background:
The Executive has pledged to underwrite the loans up to the value of £400 to Farepak customers from credit unions. Interest on the loans will be charged at standard credit union rates. The period of the loans will be decided on a case by case basis with each client.
Credit Unions will be required to maintain separate documentation of loans to Farepak customers and to undertake their usual procedures to prevent bad debt. They will then be eligible to claim defaulted payments from the Executive up to a total of 5% of loans made.
Glasgow City Council had announced a scheme to help local people who by joining a credit union in the usual way and providing evidence of having been a Farepak customer, could be offered loans of up to £400. Today's announcement means the Executive will underwrite this scheme and similar credit union schemes already underway.
It is estimated that there are 150,000 Farepak customers in the UK, with up to 30,000 of them in Scotland.
A full current list of known credit unions in Scotland will be available at http://www.scotland.gov.uk/Topics/People/Social-Inclusion/17413/CU. Further details can be obtained from ABCUL and the Scottish League of Credit Unions.