Wales politics

Credit unions 'can't compete' with payday lenders

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Media captionThe advertising campaign was 'money down the drain', AM Peter Black claims

Credit unions in Wales find it "impossible" to compete with the marketing budgets of payday lenders, an industry expert has said.

Christopher Kay, chair of the North Wales Credit Union, welcomed a one-off £650,000 Welsh government advertising campaign but said the community-based lenders needed to build more awareness.

Figures show credit union membership fell by 2.7% during the campaign.

The Welsh government said the fall was due to the closure of dormant accounts.

Credit unions have been championed by ministers in Cardiff Bay as a way for people to save and borrow money instead of turning to loan sharks.

They are also seen as an alternative to payday lenders, but Mr Kay said they could spend millions on advertising while his credit union - the largest in Wales - could only spend £20,000.

'Down the drain'

Mr Kay said the government-funded advertising campaign launched in April 2014 had been "highly effective" but needed to be followed up.

"If you're constantly not reminding people of who and what you are then you will slowly fade from memory," he said.

Figures show total membership of credit unions fell by 2,219 from 79,064 in June 2014 to 76,845 in September.

Liberal Democrat AM Peter Black, who disclosed the membership figures, said the money had "effectively gone down the drain".

A Welsh government spokesman said 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.

"They do not detract from the clear fact that the number of new credit union members in Wales is rising at a higher rate than usual, which is in-part due to our marketing campaign," he said.

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