Research by SAOS, the organisation which supports and advises food sector cooperatives in Scotland, has revealed strong support for a rural credit union in the country. Such a venture could provide sustainable financial solutions for farmers, speakers claimed at a conference last month.

Delegates at the Credit Union Workshop, being held at the SAOS conference backed a feasibility study into establishing a farm and rural credit union in Scotland. The SAOS board then green lighted the study, which will be conducted over the spring.

SAOS' Bob Yuill said development of a Credit Union would be timely given the poor returns received by savers and low confidence in banks. He added that this situation has coincided with contractions which have made access to finance difficult in the agriculture sector and pointed out that associated costs are rising whilst quality of service is diminishing in many cases.  

Mr Yuill also said Banks often mistakenly rate cooperatives as riskier than other businesses.

Credit unions are member-owned, democratically controlled financial cooperatives. SAOS believes that recent legislative changes in Scotland have widened the potential scope for credit unions operating in the country, allowing for the development of much larger scale initiatives. Speakers added that further regulatory changes are expected to benefit the development of credit unions in the UK, along the lines of the United States, where credit unions account for 94 million members and $982 billion in assets.

Due to regulatory changes taking effect from April this year, including the broadening of the 'common bond' principle which governs members' suitability, more numerous and diverse members will be able to take advantage of Credit Unions and the unions will have permission to take deposits, which would be protected by the Financial Services Compensation Scheme.

Speakers said this could increase the potential for the unions to develop; although in the US and Canada, credit unions are larger in scale and are active in farming and rural communities, in the UK they are often more localised and focused on mitigating poverty and individual savings.