We can provide the services that a bank can provide, but we do it in some ways like the banks used to do � so says Rod Ashley, head of the West of Scotland�s 20,000-member credit union ScotWest

We can provide the services that a bank can provide, but we do it in some ways like the banks used to do so says Rod Ashley, head of the West of Scotland's 20,000-member credit union ScotWest, which has this year attracted a wave of money from disillusioned customers of the traditional banks, with assets up 14% since the beginning of 2009.

Unlike the banks, the credit union has always been careful with other people's money. Ashley says: "If you want a loan, we will ask what your income and expenditure is. We will ask you to justify how you can repay the loan, ask you to borrow responsibly, and understand that a credit union is a community organisation which is run for the benefit of its members, and that you have to pay it back in time."

Ashley goes on: "It's not like the computer says yes or no, that is probably why we will have a much higher staff ratio, to look at these things, because everyone is looked at individually."

But if things go wrong, and the borrower fails to explain why, "we will chase them", Ashley says. "In some ways we probably feel more strongly about chasing people because it is everyone else's money here, and what would the other members of the organisation say?"

While banks have been banned from selling certain types of payment protection insurance (PPI) because of their mis-selling and pricing abuse, ScotWest last month became the first UK credit union to offer mortgage PPI for people worried about losing their jobs. Assets may be growing at three times last year's rate, but lending is being kept carefully in check. The pick-up in consumer confidence in recent weeks has prompted a rebound in demand for borrowing - often from those who are already borrowed to the hilt.

"There are less people coming to borrow than there were previously," says Ashley. "Some people are tightening their belts, maybe paying off some debt when they can. But there is another sector of people who have lived on debt and who are now seeing the channels closed off to them. They are turning up and asking, Can we borrow more from you?' and very often we have to say, No', because of the affordability.

"I am still astonished when I see some of the loans that people have. For someone earning about £16,000 it is not uncommon for them to have £20,000 on unsecured credit cards - not counting a car loan and a mortgage."

Credit unions have seen a rise in the incidence of personal bankruptcies since the rules were liberalised to allow discharge after only one year, with the union often one of the creditors hung out to dry.

Fortunately, Ashley and the rest of the volunteer ScotWest board have, unlike the banks, taken a counter-cyclical view.

The Financial Services Authority guideline for solvency in a credit union is 5% of total assets for smaller unions and 8% for larger ones - though a minimum reserve of 3% to 5% of total assets has been mooted, with a new tougher version proposing 8%.

"We are up to 15% to 16%," Ashley says. "We have an active policy of building the reserves." Without that policy, he admits, reserves could have been testing the 8% level.

Ashley was torn between accountancy and music at university. A pianist and organist, he became musical director of the Orpheus Club staging musical theatre in the city, and admits: "Years ago I quite fancied working in a bank."

But he trained as an accountant and worked in a Glasgow firm which was asked to help Strathclyde Police federation set up a credit union. "I remember thinking this is a brilliant idea, but nobody will ever be big enough to employ a CA on staff."

When the then Strathclyde council union advertised for an accountant manager in 1996, Ashley's new career began. Since then the staff has grown to 32 and assets from £5m to £35m - helped by the widening of the "common bond" membership criterion to include people who "live or work" in the same area.

Credit unions have grown to serve some 280,000 members or 5% of the population in Scotland, compared with under 2% south of the Border, and recent legislation has given them freedom to compete in the wider financial services market.

ScotWest's services have expanded to encompass current accounts with cards, mortgages and insurance, as well as loans and savings, and have become increasingly recognised politically.

"It has coincided with much more awareness of financial inclusion, and local authorities want to take that on board," Ashley says. "We have ended up being much more popular and we get calls from councils asking for help with various projects.

"A credit union is not a charity, it has got to survive itself. There are some people we can't help, but there are a lot of people we can."

In Inverclyde, ScotWest is partnering with housing associations, a government growth fund, and the money advice network, to provide lending facilities to people in financial difficulties who want to climb their way out.

The lifeblood of a mutual financial organisation is its savings. "If we can get people saving and putting a wee bit by for a rainy day, that is very much part of our mission," Ashley says.

The rise in assets has been fuelled by new members, and from current members moving lump sums from banks into the credit union. But Ashley laments: "One of our challenges isthe low bank base rate. Our savings is where credit unions usually make money, then we can lend it out. But we are bringing it in and getting virtually nothing on it. I have questioned whether bank base rate needs to be as low as it is. If it was 2.5%, would it make any difference to anything? At least savers would get a bit of a return."

Nevertheless, the union is able to offer a very competitive 1.5% on £1, or 2.5% on 90-day notice.

"Our current account is better than a basic bank account," Ashley says. "You have a cash card, standing orders and direct debits, a Visa debit card. Anyone who is unbanked could come to us. A number of people have also taken it as a secondary account, as it is a quicker way of transferring your savings to your current account."

He adds: "We can't do things like internet banking and joint accounts, but we have people who say if in future we offer that functionality they will make us their main bank."