Study Aims to Identify How Best to Access Credit in Rural Highlands

11th March 2008

A feasibility study has been commissioned to identify how best to provide affordable credit across the Highlands. Working under the umbrella of the Wellbeing Alliance Financial Inclusion Working Group, The Highland Council in partnership with the Albyn Housing Ltd, Highland Opportunity Ltd and Citizen's Advice Scotland has appointed consultants ~ Knowledge Partnership ~ to carry out the study and recommend a way
forward.

As part of their research, the consultants will be reviewing current knowledge and practice in this area; interviewing key stakeholders at a local and national level as well as current and potential service users. They will also conduct 600 door-to-door interviews and 400 telephone interviews; hold focus groups to test the emerging options and conclude with an options appraisal of how to provide affordable credit within the
Highland context.

One area that the consultants have been asked to examine is whether the employees of the major public sector organisations could provide the critical mass of savers needed to support a "credit union" type of body.

Councillor John Finnie, the Council's spokesperson on equalities and poverty, said: "Research suggests that the lack of affordable credit impacts heavily upon people on low incomes with individuals turning to alternative lenders such as pawnbrokers and doorstep lenders. Those without access to a basic bank account are more likely to use mail-order catalogues and high interest long-payment plans to circumvent their lack
of access to borrowing facilities. Low incomes and lack of banking facilities are more likely to affect individuals within rural areas.

"Credit unions and other forms of affordable credit are few and far between in rural areas when compared with the numbers present in urban areas. Research indicates that organising a credit union primarily in response to the financial needs of those on lower incomes has been found to limit the growth of rural credit unions, where people are less likely to self declare themselves as ~in need~, uptake of benefits are traditionally low in and individuals are less likely to seek financial advice and assistance. If credit unions are therefore going to succeed within rural areas they will need to find ways to offer financial services to all without stigmatisation."

Councillor Finnie urged those contacted by the consultants to participate in the study to ensure that their views are included to ensure that they get an accurate picture of the Highland situation.