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September 9, 2009

Banks are to blame….but everyone pays

The debris of the financial crisis is still washing through the system.  The Govt’s compensation scheme, set up to cover the failure of our big banks, is to be repaid by a special Govt levy to be collected from all financial institutions – even those that were blameless for the crisis. It seems unfair that credit unions and their members should be punished for the wrongdoings of the big banks.

CREDIT unions have attacked government levies that are to be used to help fund the Financial Services Compensation Scheme.

Tom Kelly, treasurer of Johnstone Credit Union, said the UK-wide policy, designed to re-pay the UK Government for the money it gave to the Financial Services Compensation Scheme (FSCS) as a result of the failure of five UK banks, is unfair.
The levies are to be collected from banks, building societies and credit unions, even though credit unions are not responsible for the financial crisis that hit the UK last year.

Kelly said: “The imposition of this levy on credit unions, is a perfect illustration of the damage being inflicted on communities throughout the UK by what Lord Turner of the Financial Services Authority describes as the ‘socially useless’ innovations of the mainstream banking sector.

“It is incredible that small voluntary organisations should be expected to pay for the misdemeanours of these socially irresponsible banks. The banking sector should be asked to relieve credit unions of this burden.”

Dr Bill Wilson, SNP MSP for the West of Scotland, has backed Kelly’s criticism of the move.

“It is unjust that these small organisations that have been lending responsibly should be penalised by the Financial Services Authority due to the failures of the big banks,” said Wilson.

“Credit unions have worthy social aims in that they generally operate on a non profit making basis, employ volunteers and extend finance at reasonable rates to those who would otherwise struggle. They should not be punished by the unsustainable business practices of the major banks.”