Loan sharks driven off by credit union

By Martin Cassidy BBC NI consumer correspondent

While the wider world finds itself dealing with the credit crunch, one working-class Belfast community is fighting to liberate itself from the shackles of illegal money lenders and their sky-high interest rates.

Illegal money lenders have been a fact of life for many years

Flanked by its characteristic red brick houses, the Donegall Road has always been a main route into the city of Belfast.

But for all the traffic, the people of the Donegall Road and Village area find themselves strangely cut off from modern city life and many of the financial services which most of us take for granted.

Drive down the mile-long road and you will not find a bank or a branch of a building society.

That seems amazing in an area which once was a heartland of the textile industry.

Here it seems people have been victims of their industrial history.

In an area where most homes had at least one weekly wage coming in from the nearby mill, this was fertile territory for registered money lenders.

These proud, hard-working people liked the discreet nature of the service.

Each week there would be a knock at the door and even if the interest rates were higher than you would pay at a bank, the regular repayments kept things affordable.

Because we know them, we can make the loans John Gibson Donegall Road credit union

It's a practice which has been handed down from one generation to the next.

But as in every community some folk inevitably fall on hard times.

Whether it was illness, bad luck or even a growing problem with drink, the knock was something which came to be dreaded.

As loans with reputable money-lenders went unpaid, new loans were taken out with unscrupulous and unregistered loan sharks.

And as poverty came in through the door, discretion went out the window.

Bob Stoker of the Village Regeneration Trust says some of the unlicensed lenders were charging exorbitant interest rates of 50% or more.

People in severe financial hardship handed over their social security and child benefit books to the loan sharks as it was the only way they could get additional loans.

At a little over �2 per week on a �1,000 loan, the credit union has allowed many people here to organise their finances as never before

The social security books would be handed back to their owners while they went in to collect their cash.

The loan sharks would be waiting nearby to take back the book and sometimes most or all of the money.

Another loan? At this stage the interest rate is hardly an issue.

So here in one of the most deprived inner city areas in Europe, the poor and vulnerable are paying interest rates which would break even the wealthy.

Something had to be done.

And if the big financial institutions were not interested, then the community itself would try to help.

Refurbished

So a year ago a small shop was refurbished, a counter installed and a credit union was opened by local people for the Donegall Road and Village community.

And almost at once the people came, to lodge their wages and any savings they had, and to take out loans.

Affiliated to the UK Credit Union, the shop now opens from Tuesday to Friday.

Behind the counter is manager John Gibson, who explains that new joiners initially get a one-year loan.

And of the interest rates, the repayments are so low that initially some people asked what the catch is.

But at a little over �2 per week on a �1,000 loan, the credit union has allowed many people here to organise their finances as never before.

Instead of paying high interest rates, people are now able to start saving some money for a rainy day.

The credit union also prides itself on being able to lend to some people with ill health whom a bank or a building society would not entertain.

"Because we know them, we can make the loans," explains John Gibson.

Because the interest rates are low and perhaps too because its a community enterprise, there are very few problems with people not making their repayments.

Back on track

John Gibson says the credit union writes to them and encourages them to get back on track.

A year after it first opened, the little credit union is looking to expand.

People who have joined are bringing along their family and friends and the shop is also a place where people can stop and have a chat.

For the illegal money-lenders, the opening of the credit union has been bad news.

It's true that some people on the Donegall Road are still in the grasp of the loan sharks, but the numbers are declining.

What was once a profitable territory for unscrupulous profiteers, is now offering thinner pickings.

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