Back in credit

IT is paradoxical that so many people exist without a bank account when Britain is fast becoming a cashless society. One reason is a long-held antipathy by some towards the banks and a reluctance of individuals to cede control of their hard-earned money – a reluctance that will have been perpetuated by the banking crisis.

These worries about trust are one reason credit unions have enjoyed

such a renaissance. As long ago as 2001, no less an authority than Gordon Brown was describing their emergence as a vital plank in encouraging a savings culture and protecting the most economically vulnerable from loan sharks.

It is why there will be relief that the worst of the financial troubles to beset Leeds City Credit Union, the largest such organisation in the country with 22,000 members, appear to have passed following its recent upheavals that culminated in the recent arrest of Sue Davenport, its former chief executive, on suspicion of fraud.

Responsible for the management of funds totalling 30m, it was imperative that the organisation took the necessary steps to protect the interests of its customers – and return to financial parity at the earliest possible opportunity.

This has not been without considerable hardship despite a very

necessary and timely public sector bail out – a 40 per cent cut in operating costs has led to 30 unfortunate people losing their livelihoods at such a difficult time.

The only consolation is that there will now be far more robust procedures in place to protect the running of credit unions – and that can only be to the longer-term benefit of such organisations as they become more established in local communities.

The disappointment, in such a regulatory era, is that it took a financial crisis, and the resulting loss of confidence, for these loopholes to be closed. They should never have existed in the first place.