NORTH WALES, U.K.—Credit unions in Wales are saying it is “impossible” to compete with payday lenders and their much larger marketing budgets, even though the government has provided funds to credit unions as part of an effort to raise their profile.
There has been a great deal of support for credit unions across the U.K. as alternatives to payday lenders, but the issue of providing financial assistance has been somewhat divisive.
According to the BBC, here in North Wales, Christopher Kay who chairs the North Wales CU, said the £650,000 the Welsh government provided for an advertising campaign, was welcome, but that community-based lenders such as credit unions still have much work to do in raising awareness.
In fact, the BBC reported that during the awareness campaign credit union membership declined by 2.7%. The Welsh government, however, attributed the decline to credit unions pruning dormant accounts.
Kay said competing payday lenders have the capacity to spend millions of dollars on advertising, while his CU, the largest in Wales, has an advertising budget of approximately £20,000. He told the BBC that the government-funded campaign requires ongoing follow-up.
But Peter Black, a member of Parliament, said the money spent by the government has essentially “gone down the drain.”
A Welsh government spokesperson told the BBC the campaign had resulted in credit unions signing up more than 5,300 new members, even if new rules had forced them to close more dormant accounts than usual.