The Council have bowed to public pressure, led by Liberal Democrats, and have published details of the North Yorkshire Credit Union crash and their proposed response. http://tinyurl.com/Credit-union-6th-Nov
The report confirms that the York Council is set to lose its £100,000 loan to the Credit Union while North Yorkshire will lose £200,000.
The report reveals that secret discussions aimed at getting a South Yorkshire Credit Union to open branches in York and Scarborough have been underway for several months.
The report proposes that the York Council will contribute £50,000 to the South Yorkshire organisation with a further £30,000 coming from the North Yorkshire County Council and £20,000 for Scarborough Council.
The Council are not required to give permission for a Credit Union to operate in their area so the South Yorkshire organisation is free to do so. However, as well as the £50,000 grant, the Council is offering “help in kind” – assumed to be office space at its new HQ.
At its closure, the North Yorkshire Credit Union had 5,762 members of whom 2,093 lived in York. Around £1.1 million was loaned to members, with £1.9 million invested.
The report gives no real insight into what went wrong with the Union. It quotes the reasons for the collapse as:
1. A high level of bad debts on loans made to customers
2. Relatively high overheads
3. Over dependence on a number of non-recurring grants.
Our view is that the Council needs to understand more fully what went wrong with the North Yorkshire Credit Union before it commits large sums of money to any replacement organisation. The 3 reasons for the collapse suggest major management failings which need to be remedied as conditions for any new support offered from hard pressed local taxpayers.
Otherwise the Council may be seen to be throwing good money after bad.
A Public Inquiry is essential if public confidence is to be restored.
NB. The North Yorkshire Credit Union web site has still not been updated to provide its members with any information about its collapse.