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028 9024 5640: Housing & Debt Helpline for Northern Ireland

Report reveals half of Northern Ireland Credit Unions view high-host credit providers as their main competitors

A report into how credit unions are serving low-income communities in Northern Ireland is being launched later today. The study “Towards Financial Inclusion, the expansion of credit union financial services for low-income households” has been commissioned by Housing Rights Service out of concern about increasing use of high-cost lending amongst low-income households and the crippling impact this lending is having on families.

Commenting on why the report was commissioned Nicola McCrudden, Housing Rights Service Policy Manager said: “There has been unprecedented demand for our service from people falling behind with mortgage and rent payments. With poor or no credit ratings, many of these clients are experiencing difficulties trying to access credit from mainstream financial providers. With fewer available options, more people are resorting to higher interest products from alternative credit sources including pay day loans, doorstep lenders and loan sharks. Repeated use of these forms of credit can lead to vicious cycles of over-indebtedness. This is resulting in people defaulting on their housing payments and is leaving many vulnerable to homelessness. This situation simply cannot be allowed to continue.”

The research was conducted by Liverpool John Moores University. It found that most NI credit unions are embedded within low-income communities and have significant experience in providing financial services to people excluded from mainstream financial providers. Over 50 per cent of credit union participants in the study regarded high-cost, sub-prime credit providers as their main competitors. 13 per cent said these were illegal lenders/loan sharks.

Credit unions serve around 34 per cent of the NI population in comparison to just 2 per cent of the population in Britain. However, despite the wide reach of credit unions into local communities, the study found evidence to suggest that certain sections of NI society are still not being reached by credit unions. For example, only 4 per cent of Housing Executive tenants are credit union members. 

The report’s author Dr.Paul Jones said: “Credit unions in Northern Ireland have a long history of serving low-income communities. The tenants and residents of social housing estates that we spoke to said that they found them to be approachable, friendly and responsive the needs of ordinary working people. However, they also identified a number of barriers that prevented some people from accessing their services. These included practical issues concerning the membership application process and often having to save before borrowing.”

Yet the study revealed a commitment on the part of many credit unions in Northern Ireland to expand their range of products and services to serve the needs of people on low incomes or facing financial exclusion. The report details these products and services and explores some of the economic and operational challenges credit unions face in reaching out even further into the low-income market. 

Dr Jones added: “With their sound base in the community and their commitment to social justice, credit unions are in a strong position to further expand their product and service range to low-income and financially excluded communities. Around 50 per cent of the tenants and residents we spoke to would like credit unions offer current accounts, for the receipt of wages and benefits, as well as bill payment and budgeting accounts to assist with money management, in addition to the traditional loans and savings products.”

The study also explores the ways in which credit unions can work more closely with the Northern Ireland Executive and others to ensure their services are accessed by all those who have need of them.  Ms McCrudden views the report’s findings as critically important in stimulating debate about future of affordable financial services locally:
“Housing Rights Service believes there is scope for credit unions, working alongside other stakeholders, to play an enhanced role in serving low-income and financially excluded groups within these communities. We hope this research will help to inform debate around promoting affordable credit options and to show how, by working together, Government and stakeholders can begin to tackle over-reliance on high cost credit and to support the financial stability of low-income households in Northern Ireland.”


Notes to editors:
For further information contact Claire at Housing Rights Service on 90 245640 or 07793 417806

Spokespersons will be available for comment

1. In the last 5 years Housing Rights Service has witnessed a huge increase in demand for housing debt advice. People who have fallen behind with their mortgage or rent payments may come from different socio-economic backgrounds, but often experience similar difficulties trying to access credit at a reasonable rate of interest.
2. The study was commissioned out of a concern for the detriment to the financial stability of low-income households caused by increasing levels of high-cost, sub-prime lending. It was conducted by Liverpool John Moores University and actively engaged 43 of the 176 NI credit unions in research discussions and via an online survey. It had the support of both the Irish League and the Ulster Federation of Credit Unions. It was also supported by the Consumer Council of Northern Ireland.
3. The research was conducted by Dr Paul A Jones, Reader in Social Economy at the Research Unit for Financial inclusion at Liverpool John Moores University.  He has published widely in the field of financial inclusion and credit union organisation and management
4. In 2012/2013 Housing Rights Service dealt with over 37,000 housing issues and provided representation at nearly 1,000 court hearings.