Margo MacDonald has been forced to abandon her bid to outlaw extortionate interest rates charged by licensed lending companies after being told it was beyond the powers of the Scottish Parliament.
But now the independent Lothians MSP has launched a new campaign to promote credit unions as a way of helping to stop people getting into debt in the first place.
Ms MacDonald announced during the Holyrood election campaign earlier this year that she would bring forward a Member’s Bill to cap sky-high interest rates for “pay-day loans” after coming across companies legally charging as much as 2214 per cent for their short-term lending.
But now she has had legal advice that says, because it is a consumer issue, it is a Westminster responsibility and the Scottish Parliament cannot act.
Ms MacDonald said she hoped a similar Private Member’s Bill being pursued at Westminster by Labour MP Stella Creasy would succeed.
But she said: “There is a big lobby against it and the feeling seems to be that it won’t get any further.”
She said it was “very frustrating” that Holyrood could not pass its own legislation on the issue. “We are smaller, we have simpler procedures, we can move things along quickly. I think we would get it through here without any opposition.”
However, Ms MacDonald now wants to build a cross-party consensus in support of expanding credit unions. She is asking the Government to help publicise their benefits and hopes councils will give them empty high street shops to increase their visibility.
She said: “I want to try to prevent people getting into debt and try to expand the number of credit unions – which is really community banking, easily accessible – where you can save very small amounts but if you demonstrate you are a saver you can apply and get a loan.”
She said she had written to Finance Secretary John Swinney, asking him to set up a modest fund to kick-start the expansion.
She added: “There is a certain urgency about this. People who have lost their jobs or are working fewer hours will have thinner pay packets. An awful lot of people are falling into debt. And people often get into debt in the run-up to Christmas.”
Ms MacDonald said she hoped to get an MSP from each of the parties to back the idea.
She is already working closely with Lothians Labour MSP Neil Findlay, who is a strong supporter of credit unions. He said: “They encourage people to save and they give loans at reasonable rates. We want to get them into high street locations so they become ingrained in the culture like banks and building societies.”