Why are Credit Unions being made to fund the bail-out?
Peter Black AM has a post on Freedom Central this morning entitled "The failure of joined up government" in which he explains a quirk of the financial regulation system that seems to have had unintended consequences. It seems that because Credit Unions (the bodies that exist in communities to help people get access to credit and provide other services to those on low incomes) are now regulated by the Financial Services Authority that they are now liable for part of the cost of bailing out the banks. This is due to the FSA levying a charge on every organisation it controls to help meet the debt. Apparently they are jointly liable for £8.5 million through this mechanism.
These unions are not rich. They are owned by their members and are generally run on a voluntary basis.
This surely cannot be what the government intended. Why should some of the poorest in society be bailing out some of the richest? This goes against natural justice and has echoes of the 10p tax rate debacle. There is little time to lose on this because if the first payment is not made by 1st September then penalty charges start to be applied.
If you feel strongly about this, please write to your MP and/or the FSA to complain about this injustice and demand that Credit Unions be excluded from having to fund the bail-out.
You can also help by tweeting using the hashtag: #NoCreditUnionLevy
UPDATE: Ali Goldsworthy from Freedom Central has now created a Facebook group as well for this campaign called "Credit Unions shouldn't be bailing out failing banks". I have just joined it.
Nick Barlow has posted on this subject too.
Posts
4 comments:
This government doesn't "do" natural justice, Mark. This seems to be in keeping with their modus operandi. I.e., milk everything and everyone, except their rich friends who make campaign contributions and offer directorships.
Disgusting.
We need a longer term fix as well.
We have a banking system that relies too heavily on a tax-payer-backed system to keep it in check.
I would like to see a new system proposed which has been analysed by someone who really understands risk management and how global financial instruments work.
I cannot understand the lack of urgency in tackling the current situation.
The banks are warning that changes may hamper their competitiveness but if they are too big to be competitive and also prudent, then they are too big to exist as deposit-takers.
Either they must give up their secured status (and people warned so they can move their assets to somewhere else) or they must give up risky practises
One of the FSA and FSCS letters to the firms that are required to pay this levy can be seen here:
http://www.fsa.gov.uk/pubs/other/bcr_fscs_levies_update.pdf
I have just written to our MP about this treatment of the Credit Unions.
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