Marlene Shiels

The Edinburgh-based organisation says a three-pronged approach between credit unions, government and employers is needed to steer people through difficult financial times ahead.

Marlene Shiels, Capital’s chief executive, said: “It’s absolutely vital that both the Scottish and UK governments show leadership and have a workable plan to help tackle the problem of personal debt. The furlough scheme is masking the real extent of the problem and, as it ends, I fear we’ll face a tidal wave of debt related issues. Financial resilience is at an all-time low with around 14.5 million people having less than £100 in savings.

“Appointing someone to specifically oversee the issue of personal debt would be an important first step and a message that the Scottish Government is ready and willing to address the issue of spiralling personal financial problems. The government needs to get ahead of the game rather than waiting to survey the damage and it must act now.”

The union has said that the appointment of a Tsar is part of a five-point charter Capital is promoting to aid recovery and includes a call for the UK Government to reform the Credit Union Act to allow credit unions to build a more sustainable business model, which will allow them to serve more people that need access to affordable credit. It is also seeking changes to bankruptcy rules to stop those firms that are misleading consumers to sign up to debt solutions that are not right for them, thereby causing significantly more consumer harm.

Ms Shiels said that credit unions and other financial institutions must also play their part helping their members and customers improve their financial wellbeing and resilience through promoting a savings culture with employers, developing education programmes and signposting to relevant help and support.

She added: “We also need to see regulators and oversight bodies cracking down on poor behaviour, which often leads to consumers making the wrong decisions and can have expensive and lasting effects on them. High cost and inappropriate lending and poor advice around debt solutions must stop.”

Last month, Capital also launched its Covid Wellbeing Package that it is promoting to employers and trade organisations. This includes a suite of educational and support materials as well as products specifically developed to address current issues.