Angry bank customers move their money to credit union

The public’s discontent with the under-fire financial sector has reached a peak after banks were bailed out during the recession only to announce senior executives were in line for million of pounds in bonus payments.

The North Yorkshire Credit Union has now revealed that there has been a significant rise in new customers opening accounts to invest sizeable sums of money in the past 12 months.

The credit union, which now has 4,000 members after launching in 2009, attracted 1,000 new customers in the last year with about five per cent investing £5,000 or more.

The credit union’s chief executive, Mike Horncastle, said: “Many of our new members are telling us that they’re fed up with their savings in the high street banks being used to pay huge bonuses to those partly responsible for the collapse of the UK economy.

“They are particularly angry where these bonuses are being paid by banks already bailed-out by the taxpayer.”

It was announced yesterday that Britain’s biggest banks had agreed to rein in bonuses and lend an extra £11bn to businesses this year after agreeing a controversial new deal with the Government. Chancellor George Osborne claimed the agreement would mean the banks’ total bonus pots would be lower than last year, and called for an end to “banker bashing”.

But the long-awaited truce led to the resignation of the Liberal Democrats’ Treasury spokesman in the House of Lords, Lord Oakeshott, who claimed the deal did not provide any guarantee of a net increase in lending to small business.

And Mr Horncastle added: “With the Government cutting public services to pay for the bank bail-out, the bankers continue to rake in vast wealth while the poorest sections of the community have their services cut.

“It seems like robbing the poor to pay the rich. Bank robbery in reverse, if you like.”

Plans for the North Yorkshire Credit Union were developed over five years, although its launch in 2009 was seen as particularly timely to help to ward off the effects of the recession.

The credit union, which has been partly funded by North Yorkshire Council with a £200,000 start-up loan, is overseen by the Financial Services Authority.

Savings are protected by the Financial Services Compensation Scheme, and the project was developed by extending the York Credit Union to cover the whole of North Yorkshire.

It is owned by members for their mutual benefit, which means that the more money saved and lent, the better the return.

People are able to save up to £15,000 with North Yorkshire’s credit union.

The scheme has allowed people who have difficulty opening a bank account the chance of having a savings account, as well as enabling members to borrow at reasonable rates of interest rather than having to deal with loan sharks.

But Mr Horncastle said: “There is something of a misconception in the UK that credit unions are mainly used by people in the lower income bracket.

“That is certainly not the case as we are seeing an increasing number of people who are opening accounts and investing several thousand pounds.

“The public have become increasingly disillusioned with the banking sector, and we have had people telling us they have chosen to invest in the credit union as we are locally based and trying to do something for the community.

“People are a lot more interested and educated about issues surrounding finance now, especially with what has happened in recent years.”

Credit unions have been around for more than 150 years and in the UK have a membership of more than 550,000.