Borrowing a small amount of money to buy things like shoes used to mean a visit to an unscrupulous loan shark. But three deprived areas in Barnet now have their own credit unions so residents can secure loans safely. ISABEL COE explains how they work

When Barnet Council investigated the escalating problem of loan sharks two years ago, no one could have had any idea how far- reaching the consequences of the report would be.

Today, although money lenders and debt collectors still exist many people are turning to an alternative source of money lending and financial advice ,, credit unions.

'We now have three credit unions in the borough. We set them up to help the people of Barnet,' said credit union enthusiast and leader of the council, Alan Williams.

'We have one in Watling and Grahame Park and the Finchley one was recently launched. We are now starting to assess the next area where a credit union would be of benefit,' he added. 'What we are keen not to do is to impose it on a community which is already organising something similar for itself.'

Mr Williams spoke passionately about the effectiveness of the credit unions and explained that they are often needed in areas which may seem affluent, but have deprived estates or pockets.

'We all are aware that Grahame Park and the Watling are depressed areas, but East Finchley is actually the third or fourth most deprived area in Barnet which a lot of people may not realise.

'It has the Strawberry Vale Estate and The Grange and, equally, there are patches of Arkley ward which need attention. There is still an awful lot to be done,' said Mr Williams.

The credit unions function on two levels: by offering peace of mind to residents who may need to borrow money but cannot afford interest rates offered by banks or money lenders; and offering financial advice and the option to save towards things like clothes and holidays.

The unions already in existence are thriving, but there was a time when the only way of quickly borrowing money was to approach money lenders.

In response to this the council's environmental services department carried out extensive research into the practice of unlicensed and illegal money lending and harassment of debtors in July 1998.

The report acknowledged there was a problem but admitted it was difficult to assess to what extent people were being manipulated or threatened. It explained anyone involved in money lending of any kind risked prosecution if they did not have a licence from the director general of fair trading. The licence would also ensure that certain procedures for collecting debts were followed and warned that harassment of any kind was an offence under the Protection from Harassment Act of 1997.

Since the report was published a hot-line has been set up to protect people from harassment and advise them of their rights.

But as the chairmen of the existing credit unions are quick to point out, the unions are not just about combatting the ill-effects of loan sharks. Kim George, chairman of the Finchley credit union set up in May this year, said: 'We have got quite a few large council estates in East Finchley, but the credit unions aren't only for people from deprived areas and they are not only about loan sharks.

'We are non-profit making and all the profits go back into the credit union. We allow members to save for about three months and then they can borrow at very low interest. The scale of borrowing is based on how much they have saved ,, because we started from nothing, our funds are limited.

'We are quite willing to loan someone £200 for a washing machine whereas a bank might not.'

Eyo Nkune, president of the Grahame Park credit union which was set up two years ago, was equally enthusiastic: 'We got one started in Grahame Park because the people here wanted to borrow money for pairs of shoes and things they needed, but they couldn't find anywhere to do that or to get financial advice,' he said.

'Before this was set up, they had to go outside the borough to get that advice and most of them were being harassed by loan sharks. They were borrowing £100 for shoes and ended up paying back £300.

'We managed to get the loan sharks away from the estate. We are offering the people here a service to borrow money for clothes or holidays and things they would not otherwise have.'

The credit unions are manned by volunteers and membership is growing daily. For information on services offered and opening times, call the council on 020 8359 2000, or Mr George on 020 8444 8673.

icoe@london.newsquest.co.uk