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leicestersq

Credit Unions

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Interesting debate on the Motley Fool.

http://boards.fool.co.uk/government-tackling-loan-sharks-12048728.aspx?sort=whole

What worries me about the latest scheme is that you cannot ever escape the fundamentals of lending. Some borrowers are better risks than others. You need to inflict pain upon a defaulter in some way or another, or else the lender loses money.

When the borrowers are small scale borrowers, the only way to make it work is to charge them high rates of interest because the collection cost is so high. Non-payment is also a problem, and legitimate doorstep lenders must lose loads cos they cannot collect.

I guess those who default with doorstep lenders, then must have no choice but to use loan sharks as lenders anyway. They appear to serve a function.

But credit unions worry me. Are we the taxpayer having to fork out huge amounts of money to backstop failed and fraudulent lending organisations? Why on earth are taxpayer guarantees in place for what is at heart, the very riskiest of lending procedures?

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Huh? In that thread it mentions that Credit Unions are members of the FSCS - i.e. they will have to pay into that scheme the same as banks or building societies in return for guaranteeing savers' deposits.

So why do you think they are any more dangerous than a mainstreet bank or building society?

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There is a world of difference between "loan sharks", who are unlicenced and illegal lenders who use violence and intimidation to enforce repayment, and doorstep lenders, who are licenced and use respectable methods to collect repayments and outstanding debts. For the government, or anyone else, to conflate the two is disingenuous.

It does strike me as either a very naive victorian view of lending or populist nonsense when a govt stooge (liebour or tory) pops on the radio to misinform about the two.

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Interesting debate on the Motley Fool.

http://boards.fool.co.uk/government-tackling-loan-sharks-12048728.aspx?sort=whole

But credit unions worry me. Are we the taxpayer having to fork out huge amounts of money to backstop failed and fraudulent lending organisations? Why on earth are taxpayer guarantees in place for what is at heart, the very riskiest of lending procedures?

No.

Credit unions must pay an insurance fee to the FSA for every member account they have annualy, so should one go bust the costs will have been more than covered by the many sound credit unions.

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There is a world of difference between "loan sharks", who are unlicenced and illegal lenders who use violence and intimidation to enforce repayment, and doorstep lenders, who are licenced and use respectable methods to collect repayments and outstanding debts. For the government, or anyone else, to conflate the two is disingenuous.

It does strike me as either a very naive victorian view of lending or populist nonsense when a govt stooge (liebour or tory) pops on the radio to misinform about the two.

You think so?

Far more effective to impose outrageous invented penalties and do people over with lawyers.

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  • 145 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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