A “LIFELINE” service to help vulnerable Waverley residents avoid paying sky-high payday loans, has received a £15,000 boost from the borough council’s emergency grants fund.

At June’s executive meeting, members agreed the grant to Boom Credit Union. The not-for-profit organisation offers access to fair and affordable loans, savings accounts, prepaid cards and financial advice to people, who live or work in West Sussex, Surrey or Kingston.

Formed out of a merger between the former Surrey and West Sussex Credit Unions, Boom has said 14 per cent of all its applications come from Waverley residents.

Over the last year, the number of complaints across the UK about consumer credit rose by 40 per cent to just over 36,300, according to the Financial Ombudsman Service and the roll out of Universal Credit looks set to increase the problem.

Formerly known as Surrey Save, Boom pledges that even people with a bad credit history, or on a low income, could be eligible for a loan to help pay for things in an emergenccy or vital necessities.

As social landlord to some 5,000 households, councillors agreed it was important to offer their most vulnerable residents a more ethical alternative to payday and other high interest loans, by investing in a credit union that could help them avoid being sucked into spiralling debt.

The meeting heard many households have no savings, no insurance and no access to affordable credit and that Waverley, despite on average being relatively affluent, has areas of significant financial exclusion where residents, often tenants in social or private rental homes, are reliant on doorstep lending or payday loans to manage their financial affairs.

Those without access to basic financial products such as bank accounts, often find it hard to obtain paid employment and often pay higher costs for services because they don’t get discounts for paying by direct debit and pay extremely high interest rates for credit.

In addition, the latest figures for the borough show the level of financial exclusion is growing.

Household budgets of the squeezed middle are starting to face financial stress due to high mortgage repayments owing to the high cost of housing rather than interest rates, and the rising cost of living, which is limiting access to traditional bank credit for households on low-to-middle incomes.

As a result, households are using high cost alternatives, such as payday loans.

Waverley’s finance portfolio holder Haslemere councillor Ged Hall, told the meeting: “Boom gives residents the ability to source finance at a fair price. It promotes saving and good money management.”

Tory council leader Julia Potts, who represents Farnham, said: “The importance of this to our residents can’t be underestimated.

“We have a number of residents susceptible to loan sharks who offer payday loans and such like and that can be a real slippery slope.

“It’s important we do all we can to support Boom, which is regulated by the Financial Services Authority.

“I feel we really should help a credit union that will support our residents here in Waverley.

“They provide excellent service and I want that to continue. I know I speak for the rest of the executive.”