The government is handing £38m to credit unions to help them challenge payday lenders and loan sharks.

The Association of British Credit Unions Limited (Abcul) will use the money to update its computers systems, hire new staff and create more products for its customers. The industry body hopes to serve an extra one million people by 2019. Credit unions are small, not-for-profit organisations, usually set up in local communities, that take deposits and offer loans and other banking services to their members. They help those who find it hard to access mainstream lending and cannot charge more than 26.8pc interest a year. The sector is relatively small in the UK, with around 400 credit unions. It is hoped the expansion project, funded by the Department for Work and Pensions, will help those on low incomes become less reliant on payday lenders, who often charge annual rates of interest of more than 4,000pc.....Read more here