UK workers could save more than £250 million a year in interest rate charges if companies introduced a payroll loan scheme like the Co-op.
Neyber was introduced, alongside Value Credit Unions,and have a typical rate of 7.9%APR for which more than half of Co-op colleagues qualify. Because repayments are paid direct from salaries, the Co-op’s colleague loans, provided by Neyber, and Co-op and Value Credit Unions offer a practical alternatives to high cost borrowing.
The financial wellbeing company Neyber provide education, saving and borrowing products which can be used to purchase big ticket goods such as cars or holidays, or consolidate outstanding debt, which is what the majority of co-op colleagues have done when taking out a loan.
As personal debt continues to rise it is estimated that around 300,000 people a month take out high-cost short-term credit. At the end of 2016, 1.6 million people had high cost credit debt, with the average loan just over £300. Around one in eight of the borrowers were in arrears, according to the Financial Conduct Authority.
If that interest was only 7.9% APR instead of the current capped high cost credit loan rate of £24 per £100 borrowed for 30 days, then UK workers could save a total of £252 million per year.
The Neyber financial wellbeing benefit is the latest employee benefit offered to Co-op colleagues:
Helen Webb, Chief People Officer at the Co-op, said: “We wanted to offer colleagues more practical alternatives to high cost borrowing, we are aware that some colleagues have personal debt issues that can lead to stress and impact on home and working life.
“Co-op colleagues are no different to other workers when it comes to unsecured debt. We want to help colleagues manage their finances more effectively and reduce the stresses and strains caused by debt.
“That is why we have partnered with Neyber to provide more help for colleagues who want to consolidate their debts. Neyber will work alongside Value Credit Union and Co-operative Credit Union which have been offering savings and loan accounts to Co-op colleagues for 30 and 20 years respectively.
“With a typical rate of just 7.9 %APR these Neyber loans are very competitive, and because they are paid directly from salaries are almost certainly at a lower interest rate than colleagues would pay on loans from payday lenders.
“The Co-op is founded on a set of values and principles describing a different, fairer and better way of doing business and that relates as much to our colleagues as to our members and customers.
“We know our extensive range of benefits are really appreciated by colleagues and are an important part of the overall package which makes the Co-op a very special place to work. That is why we put so much work into offering a total benefits package that in many cases is better than anything offered by our rivals.”
Other benefits the Co-op offers colleagues include: discounts at its food, Funeralcare, legal, beds and electrical businesses; interest free loans to cover the deposit on a rented property; interest free season ticket loans; and a scheme which offers tax benefits when buying a new bike plus 20 per cent off membership at Nuffield fitness centres.
Health and well-being benefits include a confidential employee assistance programme provided by lifeworks, with support and counselling available 24/7 365 days a year; health assessment and death in service and personal accident cover, as well as pensions.
For statistics and sources - https://www.employeebenefits.co.uk/issues/july-2018/co-op-payroll-loan-63000-staff/