UK retail giants launch new credit union

Some of Britain’s biggest high street names, including John Lewis, Debenhams, New Look and Next, are forming a credit union designed to offer staff an alternative to the sky-high interest rates charged by payday lenders.

Major high street brand names have been joined former Dragons’ Den star Theo Paphitis, who is both personally and through his companies investing a six-figure sum in the not-for-profit enterprise.

Officially launched this week, RetailCURe will take on the same principles of a credit union, as a financial cooperative owned and controlled by their members which offer a vital alternative to banks, expensive payday lenders and loan sharks.

Traditionally, they have specialised in loans and savings for the less well-off, but are now targeting people of all incomes.

Membership of retailCURe is open to anyone 16 or over who works in retail or a support industry – an estimated total of 4.5 million people.

The retail sector is one of the UK’s largest employers, but also has large numbers of workers on low pay.

This year research showed that the biggest annual decrease in advertised salaries was in the retail sector, where the average fell by 17.4 per cent to £21,769, though it is a sector with high numbers of part-time workers.

RetailCURe said it would be run “by the retail industry for the retail industry”.

It will be chaired by John Lovering, Chairman of retailTRUST and a veteran retailer who has led buyouts of companies including Debenhams, Homebase and Somerfield.

He said: “The industry feels that we have to find a way of providing a source of cheap, reliable credit for our people.

“The three million in retail and the nearly five million in the wider industry do have a need for low-cost, value-for-money, short-term borrowing facilities, and that’s what we as an industry are trying to provide.”

Iceland, Pets at Home, Booker and Matalan are also among the big names throwing their weight behind the project.

All RetailCURe members can access loans from £500 to £5,000 at an annual percentage rate (APR) ranging from 9.9 per cent to 26.8 per cent.

Two-thirds of the loans that have already been issued – the union has been trading for some weeks – are less than 10 per cent APR. By contrast, many payday lenders charge more than 1,000 per cent APR.

The new credit union is also offering “market-beating” rates of up to 3 per cent on its savings accounts.

To join retailCURe, an individual must open an easy access account with a £1 minimum deposit and continue to save regularly.

They are then eligible to apply for a loan or another savings account.

Some employers will be allowing their staff to pay directly into the credit union from their wage packet.