Credit unions highlighted as alternative to payday lending by Consumer Focus
A report from Consumer Focus on the pay-day lending market has recommended the extension of support for credit unions and an expansion of their services through the Post Office network to address the detriment that can be caused by high-cost, instant borrowing.
Pay-day loans are cash advances against the recipient’s next salary payment – a post-dated cheque or authorisation to take payment from the recipient’s bank account is provided as security. Typical APR can run from 2,000% to 3,000% or more.
The report, Keeping the plates spinning, finds that since 2006 the pay-day lending market has grown to have 1.2 million customers lending £1.2 billion last year. Those typically lending are under 35, living alone and with a relatively low household income of less than £25,000. Credit unions are recommended as part of a solution to prevent the convenience of pay-day lending becoming a cycle of repeat borrowing and ballooning debts.
The report states: “Credit unions provide a valuable source of affordable credit, but there are limits on their accessibility as they still operate on a relatively small scale in the UK. Nonetheless, credit union membership may be an option for consumers who are trying to avoid the possibility of future resort to payday lending by saving. They would also be better placed for access to lower cost borrowing if the need arose subsequently.”
ABCUL Chief Executive, Mark Lyonette, said: “We welcome this report from Consumer Focus. Pay day lending has exploded in the UK since its relatively recent introduction from the US several years ago. Whilst on a one-off basis, lending like this is not necessarily dangerous – where such lending becomes routine and loans are rolled over debts can quickly mount up and become unmanageable.
“Credit unions offer a long-term solution to managing personal finances – offering savings facilities as well as affordable credit and with a focus on excellent service and support for members, credit unions strive to break the cycle of debt dependency and put people back in control of their financial position.”
East Kilbride Credit Union’s local MP, Michael McCann, has given them his wholehearted backing and has urged constituents across East Kilbride and Strathaven to support the local, community-based financial organisation.
The MP followed up his words by opening his own account at the credit union.
Michael said: “The banking crisis was a real body blow to the nation’s economy, but if you analyse the banking sector it was the cooperative-based models, like credit unions, that weathered the storm best and have emerged from the crisis intact.
“The credit union is owned and controlled by its members but it also benefits from strong support from ABCUL and is regulated by the Financial Services Authority.
“I suppose, like many people, I have always wanted to join the credit union but never got around to it. I have changed that this week by opening my own account and I hope many others follow in my footsteps.
“It's worth remembering that credit union membership is open to anyone who lives or works in East Kilbride and Strathaven. Other local credit unions are also available across the constituency.”
John Lange, the general manager of the EK credit union, and board members, briefed the new local MP on forthcoming proposals to change regulations governing credit unions and are now seeking Michael’s support for their continued success.
John said: “We are delighted Michael is involved with our work and that he has confirmed he can advocate for our industry’s needs in parliament. We look forward to a long and fruitful relationship.”
17 Aug 10 -
Worksop & District Credit Union receives funding boost from Barclays
Worksop & District Credit Union has been given a major boost thanks to a donation of over £46,000 from Barclays. The funding will allow the Worksop & District Credit Union to expand and deliver its high quality affordable loans and savings products to the population of Bolsover District.
The credit union has also received funding and support from the Bolsover Financial Inclusion Project and the combined monies will be used to expand the credit union’s valuable service to the Bolsover area.
Working with the Bolsover Methodist Church the Worksop & District Credit Union has successfully trained 10 volunteers to run the new collection point to be held in the church. Anyone who lives or works within the Worksop & District Credit Unions common bond eligibly to become a member and access the credit union’s services.
Marie Morris, Community Investment Manager for Barclays said: “At Barclays we are committed to looking after local communities and we are delighted to support this project. The Barclays funding has allowed the Worksop & District Credit Union to offer safe savings and affordable loans via the partnership with the Bolsover Financial Inclusion Project to communities within Bolsover which will reduce financial exclusion in the area.”
The new collection point will be launched at the Bolsover Methodist Church’s community event on Friday 27th August starting at 7.30pm.
06 Aug 10 -
Miliband and Jowell call for greater role for credit unions and mutuals
Labour leadership candidate and Shadow Foreign Secretary, David Miliband, has joined Tessa Jowell, Shadow Cabinet Minister, in calling for a greater role for credit unions and other mutuals in Financial Services.
In an article for Progress, the pair call for a stronger role for mutuals across public life including the mutualisation of the BBC.
On financial services they said: “Cooperative banks, building societies and credit unions all embody the best of the mutual tradition - meeting the needs of consumers while also promoting a model of ethical, values-led businesses, behaving responsibly in an industry where too many have not. This is driven by a belief that people can achieve most when they work together, and that business should seek to serve wider social ends not short-run profitability ... This is why we believe that a strong and vibrant mutual sector must be a key feature of our banking system in the years to come.”
ABCUL Chief Executive, Mark Lyonette, said: “The value of the mutual model is receiving political support from all parties at the moment – a development which is to be welcomed.
“Credit unions, and mutuals generally, being owned and controlled by their customers, have a strong focus on providing an excellent service. We are pleased that this fact is receiving the acknowledgement it deserves and look forward to working with all parties to continue developing our sector in the future.”
Consumer Focus Wales call for support for credit unions
A research report by Consumer Focus Wales, Debt and credit use, has called for support to be continued for the development of Welsh credit unions and calls on Government to consider again the case for making credit union services available through the Post Office.
“The Welsh Assembly and UK Governments should continue to explore opportunities to improve the links between the Post Office and credit unions to widen access to credit union services among consumers and also support the Post Office network,” the report recommends.
The report highlights the day-to-day struggle Welsh consumers are facing with mounting debts and deteriorating economic prospects during the recession – many of those in debt are borrowing simply to cover everyday expenses (21%) or household bills (13%). They see credit union development as a key element in the solution to this.
The report states: “we believe the current financial climate offers significant opportunities to boost the role of community banking in our society. The Welsh Assembly Government’s forthcoming Credit Union Action Plan is very welcome and we hope their support of the movement is able to continue over the coming years. Building sustainability into alternative lending approaches, such as credit unions and Community Development Finance Institutions (CDFIs), is critical both for their own survival and so they can continue to provide their services to consumers. In such difficult times this is particularly important as not only are they currently the main solution for extending affordable credit to low–income consumers, they also have the potential to offer a range of other financial products and services to this group. Their continued development may also go some way to bringing back public trust in the financial services sector.”
ABCUL Chief Executive, Mark Lyonette, said: “We welcome Consumer Focus’ plea for Government support in the development of credit unions. With the right support, credit union services can be made available over every Post Office counter in the country – greatly increasing credit unions’ reach and enhancing the prospects of one of the most valued institutions in the country: the Post Office network.”
West Lothian credit unions secure funding for fuel poverty project
The West Lothian Credit Union Forum has been given a £90,000 boost from the ScottishPower Energy People Trust to set up a project which will help young people and families living in fuel poverty in the area.
The Forum will receive funding towards an energy advice programme aimed at lifting young people and families with young children out of fuel poverty.
The credit unions are working in partnership with the West Lothian Council Advice Shop and West Lothian Financial Inclusion Network to deliver the scheme and to identify people in need of energy guidance. The service will provide expert energy advice to around 750 people.
Ann Loughrey, ScottishPower’s Head of Corporate Social Responsibility and The ScottishPower Energy People Trust’s Company Secretary, said: “We are delighted to fund this valuable service provided by West Lothian Credit Union Forum. It is exactly the kind of project the ScottishPower Energy People Trust is keen to help.
“Young people and those with young children may need a little extra help with their energy requirements which is why it’s good to offer advice at an early stage. By speaking to an energy advisor it will enable them to become more comfortable with their energy usage and finances and start them off on the correct path so they can avoid getting into debt.”
West Lothian Credit Union Forum was formed in 1999 by the three credit unions operating in West Lothian (Blackburn Seafield & District, Capital and Livingston) as well as West Lothian Council to promote credit union membership to all who live or work in West Lothian, particularly those who are financially excluded.
Liam Murphy, Chairman of West Lothian Credit Union Forum, said: “As well as getting advice on improving energy usage, members will be able to get access to loans to fund the replacement of inefficient appliances, the cost of improving home insulation or moving to lower energy tariffs. The ScottishPower Energy People Trust’s funding will enable the project to reduce the number of people in West Lothian slipping into fuel poverty."
Citizens Advice report highlights work that credit unions do with bankrupts
A recent report published by Citizens Advice has highlighted the role that credit unions play providing transactional bank accounts to undischarged bankrupts.
The report, which illustrates the many day-to-day difficulties people can face when denied a bank account during their bankruptcy, looks at Credit Union Current Account providers as one of a handful of financial organisations that will provide an account to an undischarged bankrupt. Of the high street banks, currently only Barclays Bank and The Co-operative Bank offer accounts to undischarged bankrupts.
Mark Lyonette, ABCUL Chief Executive, said: “This report is welcome recognition for the work credit unions do with undischarged bankrupts. For undischarged bankrupts to be denied access to transactional banking only worsens their already significant financial difficulties. Yet there is no regulation or legislation that prevents an organisation from doing so.
“Providing access to transactional banking for undischarged bankrupts and other hard-to-reach groups is not impossible, nor too risky, provided the correct approach is adopted: strong relationships with members, active recognition and support for those with difficulties and tailoring products and services to their needs.”
Credit unions in Glasgow and Wigan go from strength to strength
Glasgow Credit Union, the largest credit union in Britain, recently welcomed its 25,000th member – a landmark moment in the credit union’s 21 year history.
Curtis Walker, was delighted with his ‘25 Reasons To Love Your Credit Union’ hamper, which helped celebrate the landmark achievement and his decision to join Glasgow Credit Union. Curtis had spotted the credit union on Martin Lewis’ website www.moneysavingexpert.com.
In Glasgow, one in five people are a member of their local credit union.
Elsewhere, Unify Credit Union in Wigan reached a landmark of its own with outstanding loans to members now topping £1 million. Since its opening in 2002, Unify has saved the residents of Wigan and Leigh, Greater Manchester, more than £3 million in interest payments if the cost is compared with the leading doorstep lenders.
23 Jul 10 -
Marlene Shiels elected to WOCCU Board
Marlene Shiels, ABCUL Director and Chief Executive of Capital Credit Union, Edinburgh, has been elected to the Board of the World Council of Credit Unions (WOCCU) having been co-opted onto the Board last year.
Marlene is only the second British representative ever to sit on WOCCU’s Board. The election took place at WOCCU’s annual conference which this year was held in Las Vegas, Nevada.
WOCCU is the global apex body representing more than 49,000 credit unions, operating in 97 countries and serving 184 million members.
09 Jul 10 -
Credit unions in global growth spurt
Credit unions across the world saw an increase in member savings and loan activity during 2009, according to World Council of Credit Unions' (WOCCU) newly released 2009 Statistical Report. The trend illustrates the increasingly important role that credit unions and other financial cooperatives played in their members' lives during last year's global recession.
Total savings for credit unions reached more than $1.1 trillion, the highest level recorded since WOCCU first began conducting the annual survey in 1972. The rate of growth represents nearly a 15% increase compared to the 2008.
The report’s findings mirror data from ABCUL credit unions who saw a 15% increase in savings and 8.5% increase in membership in the year to September 2009.
Loans were another indicator demonstrating strong growth over the previous year, climbing to nearly $912 billion from $847 billion in 2008. This sizeable increase is further accentuated in contrast to a slight decrease in loans globally between 2007 and 2008. Annual survey respondents from 97 countries worldwide reported that 49,330 credit unions served nearly 184 million members.
In recent years, credit unions worldwide have seen notable growth in assets, membership, savings and other indicators. Cumulative assets reached nearly $1.4 trillion in 2009, up from $1.2 trillion in 2008, and reserves reached nearly $120 billion in 2009, up from slightly more than $115 billion in 2008. Strong financial performance demonstrates members' renewed faith in credit unions' resiliency during difficult economic times.
ABCUL Chief Executive, Mark Lyonette, said: “The findings of WOCCU’s Statistical Report illustrate how well credit unions have performed during the financial crisis and recession.
“With trust in the mainstream banks falling, people are turning to credit unions as an alternative in ever increasing numbers.”
Glasgwegian credit unions partner in innovative affordable housing initiative
First time buyers are set to benefit from a new £2.1million support initiative developed by leading Scottish house builder Cruden Homes alongside Glasgow Credit Union, NHS Credit Union and The Co-operative Bank. The scheme seeks to address the major financial challenges which are preventing many potential buyers from securing a traditional mortgage.
The scheme – named Unique Property Solutions (UPS) – was launched on Thursday (8th July) by Scottish Housing and Communities Minister, Alex Neil MSP. It will provide tailor made mortgage products and services which offer first time buyers up to 20 per cent deposit funding loans and mortgages of up to 95 per cent, following a full assessment of each individual’s financial position and ability to repay.
The initiative supports the Scottish Government’s housing policy which has identified the need to adopt a fresh approach to fund affordable housing in Scotland, helping would-be buyers overcome major financial obstacles such as raising large deposits, poor credit history and low incomes.
Alex Neil said: “Scotland's housing system must adapt with radical thinking and bold new ideas to the financial realities presented by the credit crunch and reductions in public spending.
“More than ever we need the public and private sectors to work together to make sure people in Scotland can meet their housing needs and aspirations.
“I welcome innovative approaches, such as this initiative, being developed by private companies in partnership with other organisations, to try to help first-time buyers get onto the property ladder.”
John Gallacher, managing director of Cruden Homes, said: “UPS is a funding initiative tailored to each individual’s circumstances. We know there are many young people, first times buyers and people with a poor credit history who are being excluded from owning a home.
“Our approach is to work with these individuals to encourage regular saving through Glasgow Credit Union and build a bespoke re-payment plan so that in 6-12 months down the line they can be considered for a mortgage. This initiative is perfect for first time buyers who have been unable to save large deposits, who may have struggled to obtain a mortgage from the bank or who feel their income is too low.”
In addition to the £2.1m support initiative, UPS will provide a full package of financial support from the credit unions and The Co-operative Bank. This will include access to savings facilities, affordable credit, money and budgeting advice and home-buying guidance.
Kate Dunlop, Chief Executive of Glasgow Credit Union, the largest in Britain, said: "We work tirelessly to improve the financial circumstances of all our members and to ensure that our potential members are aware of the diverse range of ethical financial services we offer.
“This is an important partnership which will assist in the regeneration of Glasgow and help people achieve their aspirations to become home owners. We are proud to be working with Cruden and hope that the initiative is a catalyst for more".
John Gallacher added: “The biggest barrier to home ownership is finance, and as a responsible builder, we have made it our priority to work with our partners in the public and finance sectors to overcome this chronic problem in Scotland.
“We’re confident our new UPS package will offer many new buyers, particularly those buying a house for the first time, a real alternative to obtaining a traditional mortgage.”
For further information on Cruden’s Unique Property Solutions package or information on Cruden’s four developments in Govan, please call Linda McLean on 0141 583 4157.
09 Jul 10 -
Reading Credit Union Expands to Cover Berkshire
Reading Credit Union has been given the go-ahead to expand across the county. The credit union has been operating since 1997. It will become Berkshire's first credit union after a successful application to the Financial Services Authority (FSA).
As part of the expansion, the credit union name will become Berkshire Community Savings and Loans.
David Screen, chief executive of the service, said: "I am delighted with the news from the FSA, they have clearly recognised that we are a strong and growing local enterprise and wish to support our growth.
"We will be looking for volunteers across Berkshire to help set up our local services during August and September."
02 Jul 10 -
Minister sets out Government support for credit unions and mutuals
Financial Secretary to the Treasury, Mark Hoban MP, yesterday confirmed the new Coalition Government’s commitment to credit unions and mutuals at a House of Commons reception organised by the All-Party Parliamentary Group on Credit Unions (APPG).
Mark Hoban explained the lessons that are being learnt from the recent past in the financial sector and set out the Government’s plans for supporting credit unions as part of its policy commitment to foster diversity in financial services, promote mutuals and create a more competitive banking industry.
“We are determined to help credit unions grow and expand into the future. But growth and expansion must be established on the basis of credibility – credibility that can only come as credit unions build sustainability. And it is in the interests of credit unions, the members of credit unions and the movement as a whole that sustainability is built.
“This Government believes that strong credit unions will greatly enrich British society, so it is in our interest to do whatever we can to help the credit union movement to prosper.”
Damian Hinds MP, the new chair of the APPG, said: “This is set to be an exciting time for the credit union movement with the new opportunities afforded by the Legislative Reform Order, partnership potential with the Post Office, and of course a much sharpened focus on debt as an issue at all levels. I am delighted the All-Party Group on Credit Unions has now been re-formed with very broad support, and I am sure we can play a helpful role in that agenda.”
Reverend Antony Macrow-Wood, President of ABCUL, said: “It is good news that the Government will support the valuable work of credit unions and we hope that the new legislation, which will make such a difference to the sector, will complete its passage through Parliament as quickly as possible.
“We look forward to working with the Minister, the new Chair of the APPG and its members, in the coming months and years, to create a credit union sector to be proud of.
“New legislation will help credit unions reach out to many more people. The work we are doing to develop a back office and extend our services through the Post Office will also make credit unions more accessible and convenient and we need to work together to achieve this.”
The reception was organised in conjunction with ABCUL – the Association of British Credit Unions – and supported by The Co-operative Bank, which has a long history of backing credit unions through preferential banking services and research. It was attended by credit union staff and volunteers, supportive MPs and Peers, and relevant stakeholders from across the consumer affairs, financial inclusion and financial services industries.
Other speakers included Debbie Wheeler, Head of Charity and Social Enterprise Banking at The Co-operative Bank. Commenting at the event, Debbie Wheeler said: “As a long standing supporter of the credit union movement, we are pleased that the new Government has made this commitment to develop the sector.
“Credit unions can play an important role in a diverse financial services market and, in particular, in helping to tackle financial exclusion.”
The reception also marked part of the credit union sector’s contribution to the Co operatives Fortnight celebrations which run from 19 June to 3 July.
Ex-Home Secretary, Alan Johnson MP, visits Hull and East Yorkshire Credit Union
Alan Johnson, MP for Hull West & Hessle, and former Home Secretary, dropped in on Hull & East Yorkshire Credit Union (HEYCU) recently to help members, staff and volunteers celebrate the first ever Co-operatives Fortnight.
Alan was the guest of honour at HEYCU’s launch in 1999 since when the credit union has grown to have over 7,100 members, 500 junior savers and manage £4 million of local people’s savings. Today the credit union employs 11 staff and is proud to have saved its members over £5 million in interest that the same loans would’ve attracted if given by leading doorstep lenders.
"Co-operatives Fortnight 2010 runs from 19 June to 3 July and is a new national event to draw attention to the big contribution that co-operative businesses like ours are making to their local economy," commented John Smith of HEYCU. "We thought it fitting to invite Alan Johnson MP, who spoke at our launch eleven years ago, to return to find out what we have managed to do so far and learn about our exciting expansion plans for the future".
Shortly after Alan’s visit, HEYCU also welcomed Graham Stuart, MP for Beverley & Holderness, to their Central Office. Representing a more rural constituency, Graham was very interested in the way the credit union serves members living in the more remote areas, through the use of town branches, Paypoint cards, the website and local authority Customer Service Centres. He could see the potential for closer links with the Post Office network in the future.
02 Jul 10 -
MP becomes 1,000th member of Camden Plus
Camden Plus Credit Union marked the first anniversary of its Camden Town branch recently with local MP Frank Dobson signing up as its 1,000th member. The conferring ceremony saw staff led by James Richards, Manager of Camden Plus, welcome Mr Dobson to the Credit Union, along with representatives of Barclays.
James said: “We are very excited to welcome Frank as our 1000th member only one year after opening our branch. To reach this milestone is demonstration of our success in responding to demand for responsible, inclusive financial services tailored to the needs of local residents.”
Frank Dobson added: “I am very pleased to be here to encourage the work of Camden Plus as it continues to grow and extend its reach in the local community and enable greater financial inclusion, as well as keeping people out of the hands of the sharks.”
Camden Plus Credit Union also recently celebrated its successful application for a grant from the Barclays Community Finance Fund, the purpose of which is to improve access to affordable credit. The credit union was one of six successful organisations from across the UK that will share the £250,000 fund.
Reema Shah, Financial Inclusion Manager at Barclays, said: “Since 2005, we've given over £3m to the UK community finance sector as part of our financial inclusion strategy. We are proud of the role we are playing in helping to promote the sustainability and reach of the sector. Credit unions play a vital role in providing affordable financial services to vulnerable consumers and we are delighted to be supporting Camden Plus.”
02 Jul 10 -
Erewash Credit Union reaches £1 million loan landmark
Erewash Credit Union has reached a major milestone – it has provided more than £1 million in low-cost loans to people in Erewash borough. This represents an estimated £1.5 million interest saving compared with the same loans from a doorstep lender – this money is retained in the local community.
With support from the Coalfields Regeneration Trust, the credit union has helped more than 1,700 people since it was set up in 2007.
Howard Forster, chairman of Erewash Credit Union, said: “We have many local residents and workers who are using the Credit Union to save by cash, cheque, standing order and internet banking.”
“Hundreds of people are using the Credit Union to pay in their Government benefits and some people are paying in their wages. This allows the Credit Union to provide small loans at affordable interest rates. For example, a £500 loan costs a total of £11 per week to repay over 51 weeks including an annual interest charge of £58, with no fees or penalties”
Seamus Grant, manager of Erewash Credit Union, said: “Many of the loans we release are to workers who may be struggling to get credit from their bank or from other lenders. They are fed up with paying up to 50% APR from loan companies or even up to 2300% APR from payday lenders or cheque-cashing centres.
“Other people on lower income and who may be receiving government benefit do not have access to mainstream banking. They are vulnerable to doorstep lenders or, even worse, loan sharks charging extortionate interest rates.
“We provide hundreds of Christmas loans and at this time of year we help hundreds of local families with holiday costs.”
25 Jun 10 -
All-Party Parliamentary Group on Credit Unions Reformed
The All-Party Parliamentary Group on Credit Unions has re-formed following last month’s General Election. Damian Hinds, Conservative MP for East Hampshire, was elected Chair of the Group in its inaugural Annual General Meeting which took place on Thursday 17th June. He takes over from Sir Ian McCartney who chaired the Group since June 2009 and who stood down at the Election due to ill health.
The Group also elected officers into its other positions including the re-election of Liberal Democrat Deputy-Leader, Simon Hughes MP as Vice-Chair, Labour MP for Bridgend, Madeline Moon MP as Vice-Chair, and two of the new intake of MPs Labour’s Yvonne Fovargue (Makerfield) as Secretary and Chris Evans (Islwyn) as Treasurer.
New Chair, Damian Hinds, takes on the role with significant experience of credit unions having worked alongside Trafford United Credit Union when he stood for MP in the Stretford and Urmston constituency in Greater Manchester and later alongside Hampshire Credit Union (now United Savings and Loans) in his current constituency.
He said: “I am delighted to have been elected Chair of the All-Party Group on Credit Unions. I am looking forward to building a strong base of support in Parliament for the invaluable work credit unions do around the country.”
25 Jun 10 -
New report highlights the benefits of supporting credit unions for councils
A report by the Local Government Association has highlighted the vital role credit unions can play in supporting communities with their finances and the benefits that this can have for local authorities.
The report, From Recession to Recovery: The importance of personal finances, looks at how support for residents in managing their finances can greatly improve their financial position which in turn boosts their ability to meet their obligations to both the Council and others and reduces the strain on local authority services.
North Yorkshire Credit Union, which recently moved from serving only York to serve the whole of the rural county with support from the County Council, is cited in the report which is going to be sent to every councillor in England and Wales. Because of the Council’s support the credit union has been able to help many more people who may otherwise have fallen into arrears including one man who, thanks to a last minute loan from the credit union, was able to call off bailiffs who were ready to repossess his belongings having fallen into Council Tax arrears.
Mark Lyonette, ABCUL Chief Executive, said: “In the current economic environment and with public sector cuts on the horizon, this report is a welcome look at the benefits that targeted spending can have. Supporting a credit union to expand today can prevent thousands of people from falling deep into debt and being unable to pay their tax or rent to the council in future with all the dreadfully expensive court-hearings, evictions and repossessions that this can entail.”
25 Jun 10 -
Wrexham Credit Union opens a new branch
Wrexham Credit Union recently opened its new town centre office on King Street. The office was opened by Welsh Assembly Government Social Justice Minister Carl Sargeant AM.
Building on strong support from the local authority and from the Welsh Assembly Government, the credit union hopes that the new premises will allow it to provide a better quality of service to its rapidly growing membership
Credit unions in Wales say there has been a big surge in demand for loans amid the economic downturn, with many people refused help by the banks.
Credit unions across North Wales are now discussing how they can work together more closely in the future. As part of a larger organisation, this could mean that Wrexham Credit Union will soon be able to offer a better bilingual service and new services such as a debit card for members.
Carl Sargeant said: "Credit unions are a safe and affordable way of saving and borrowing money.
"I am delighted to see so many people in Wrexham taking advantage of the services on offer here. Membership is open to all, and I would encourage everyone to join.
"I am a credit union member myself and feel reassured that my money is safe and that trustworthy financial help and advice is available should I need it."
11 Jun 10 -
Ministers and MPs support credit unions in Parliament
Ministers from across Government have been making supportive statements on credit unions early in the new Parliament. MPs new and old have been putting incisive questions on the development of credit unions from opposition and have been met with enthusiasm from the dispatch box.
New MPs Chris Evans (Islwyn), Alex Cunningham (Stockton North) and Yvonne Fovargue (Makerfield) all used their maiden speeches to call for continued support for credit unions whilst long-serving Parliamentary supporters Kerry McCarthy and Bob Russell have also been speaking out in favour of credit unions.
The first Minister to set out the Government’s support for credit unions was Caroline Spelman, Secretary of State for the Environment and Rural Affairs: “Chris Evans commended the work of credit unions and I concur entirely that they provide a safe way to access credit, especially for people in straitened circumstances who find credit hard to secure.”
Secretary of State for Work and Pensions, Iain Duncan Smith, confirmed his support for credit unions following his endorsements in opposition with the Centre for Social Justice: “Alex Cunningham spoke about credit unions and loan sharks. I am with him on that: we need to do a lot more to try to break the stranglehold of doorstep lenders and, more particularly, of the very bad elements among loan sharks. I am very strong on seeing what we can do about credit unions.”
Finally Treasury Minister Justine Greening affirmed the new Government’s support for legislative reforms in response to a question from ex-Chair of the All-Party Parliamentary Group on Credit Unions, Kerry McCarthy: “We do support credit unions. In fact, one of the first things that the new Secretary of State for Wales did on her appointment was to visit her local credit union in Wales. We have said that we want vibrant, sustainable credit unions. We are looking at the legislative reform order to which the hon. Lady referred and I hope that we can come back with some further dates in the next few weeks. As she can imagine, the focus right now has been on the emergency Budget, but I am aware of the order and officials are talking to me about the time lines for it.”
11 Jun 10 -
Banking reports highlight the strengths of CUCA
Two new reports this week have illustrated the failings of the current account market. Consumer Focus, On the Margins, shines a light the difficulties presented by a lack of access to a bank account. Whilst Citizens Advice Scotland’s Fully Charged looks at the levels of bank penalty charges. The Credit Union Current Account, meanwhile, offers an example of how things can be different.
On the Margins highlights how being without a bank account can cause people serious difficulties in going about their daily business; be it paying more for bills without access to direct debits, or securing employment. Also, the report adds further evidence to past research showing common reasons for exclusion from banking. These can range from problems in providing the appropriate identification, lacking a sufficient level of financial capability and therefore requiring extra support and negative past experiences with bounced payments and mounting penalty charges.
Meanwhile Fully Charged demonstrates how those that can least afford it are those hit most with penalty bank charges and how unhelpful consolidation loans are routinely offered as a solution with the effect of only compounding debts.
The Credit Union Current Account (CUCA), which is available through 25 credit unions and was developed jointly by ABCUL and the Co-operative Bank, works on different principles. By applying a fixed monthly or weekly charge to cover the operating expenses of the accounts, credit unions are able to drastically reduce the penalty charges that they levy from customers who miss Direct Debit payments or go into unauthorised overdraughts. Similarly, CUCA holders receive considerable support and guidance from credit union staff in how to manage their account and to avoid missing payments. Such flexibility and support are highlighted as recommendations in both On the Margins and Consumer Focus’ report earlier in the year Opportunity Knocks.
Consumer Focus were also supportive of the expansion of credit union services through the Post Office network which the Department for Business, Innovation and Skills committed to earlier in the year.
ABCUL Chief Executive, Mark Lyonette, said: “These two reports clearly demonstrate the strengths of CUCA which is just one example of the excellent, member-focussed products that credit unions offer. The expansion of credit union services – especially through partnership with the Post Office network – could transform the financial well-being of many who currently go under-served whilst injecting much needed competition and diversity into financial services.”
Wednesday saw a conference in Edinburgh hosted by the Church of Scotland and the University of Edinburgh entitled How a Scottish Minister Changed the Financial Landscape.
The conference marks 200 years since, in 1810, the Reverend Henry Duncan of Dumfriesshire set up a savings bank for the poor in the belief that encouraging the poor to save would improve their ability to support themselves and reduce their reliance on charity.
Although language and attitudes have changed markedly, comparisons have been drawn between the savings banks of Duncan and the modern British credit union movement.
Writing in the Sunday Herald, Reverend Dr Graham Blount of the University of Edinburgh’s Centre for Theology and Public Issues notes that, “Glasgow has over 120,000 credit union members (20% of the population – more than any other city in the UK), with a financial asset portfolio of more than £170 million,” and that “credit unions seem the natural inheritors of the Duncan tradition.”
Frank McKillop, ABCUL Policy Officer for Scotland, said: “Credit unions are proud of their heritage in Scotland, in Britain and internationally. Just like Henry Duncan’s savings bank all those years ago, credit unions are passionate about providing services to everyone in their communities – not just the better-off. And just as Duncan recognised the importance of attracting business from the better off in order to sustainably serve those with fewer financial choices, credit unions are serving an increasingly diverse membership and providing choice and competition in the financial services markets – often beating banks and building societies for return on savings and low interest rates on loans, as well as offering a wide range of financial services and products including current accounts and mortgages”
“As in Glasgow, where one in five of the population are credit union members, a strong credit union movement can have a real positive impact on consumer choice, competition and stability in financial services.”
26 May 10 -
ABCUL Supports OFT's Loan Shark Campaign
ABCUL has welcomed this week’s launch of a new advertising campaign by the Office of Fair Trading (OFT) warning of the dangers of loan sharks and encouraging people to report them.
Credit unions are often at the frontline when it comes to dealing with the devastating effects that borrowing from illegal loan sharks can have on individuals and communities. They often have to help people pick up the pieces after they have suffered at the hands of loan sharks – but many of the problems could be avoided if people went to their local credit union first.
As financial co-operatives, credit unions provide safe savings and affordable loans facilities for everyone in their communities and actively work with their members to improve their ability to manage their financial affairs. Working with members to budget, build savings and borrow sustainably, credit unions can provide a long-term financial solution to many of the problems that can sometimes see people fall into the hands of loan sharks.
Mark Lyonette, Chief Executive of ABCUL, says: “The vast majority of people who find themselves at the mercy of loan sharks do so as a result of chronic financial difficulties and credit unions can be an important part of the solution to this.
“Not only do they provide regulated credit and low interest rates, but they support their members to manage their money effectively through encouraging saving and helping people to budget and plan for the future.”
26 May 10 -
Credit Unions in Glasgow Host Moneymadeclear Money Guides
The Consumer Financial Education Body (CFEB) - a new, independent body established by the UK’s financial regulator, the Financial Services Authority - has teamed up with credit unions in and around Glasgow to deliver impartial face-to-face money guidance sessions.
CFEB, staffed by former members of the FSA’s Financial Capability Division, will continue the work started by the FSA, including Moneymadeclear, a national money guidance service giving personalised help on money matters – face-to-face, over the telephone and online; providing clear, impartial information.
Credit unions such as Pollok CU and Yoker CU – both of which serve some of the most deprived areas of Glasgow – are hosting regular visits from CFEB’s Edwin Finlayson who holds money guidance sessions for people who’d benefit from information about managing their finances.
The Moneymadeclear face-to-face service is being rolled out nationally, having been piloted in the North of England during 2009 where credit unions in Manchester, Liverpool and Tyne & Wear have also been providing money guidance sessions. Glasgow has been selected for early implementation having been identified as an area with a particularly high need for money guidance.
Jim Garrity, Manager at Pollok Credit Union, said: “We are really pleased to be able to offer our members the opportunity to come and see a money guide. Many of the people we serve have difficulty understanding financial services on offer to them in an increasingly complex world. Often all they need is for someone to explain what different terminology means and to be pointed in the right direction – that’s exactly what Edwin does. He also helps our members cope financially with the unexpected, plan for the future and get the most from their money generally.”
Allison Barnes, CFEB’s Financial Capability Manager in Scotland, confirmed: “If we are to make a real difference we need to get to the right people at the right time. It’s therefore crucial that we work together with partners such as credit unions and I’m very grateful for the support you’ve given us to date. We will be continuing to work with credit unions as we roll our service out nationally, and I look forward to building relationships over the coming months.”
New Wales Ministers visit Clwyd Coast Credit Union
Cheryl Gillan, the new Secretary of State for Wales and Wales Minister, David Jones, have visited Clwyd Coast Credit Union in their first week in office and paid tribute to the work of staff and volunteers.
Cheryl Gillan said: “I came here when I was Shadow Secretary of State and was so impressed with the vital work that Clwyd Coast Credit Union was doing by providing financial services to everyone in the community, that I felt that one of my first acts in post should be to re-contact them and offer my support.”
“The numbers, commitment and skills of the volunteers is truly amazing.
“I have seen them perform skilfully, sympathetically and efficiently under difficult circumstances. I have nothing but admiration for them.”
David Jones, Minister for Wales and MP for Clwyd West, said: “I am also mightily impressed with the sterling work that the Credit Union does. I wish them all success in the future and I have also promised any help or support I can give them.”
John Killion, Chair of the Credit Union, said: “It is gratifying that the Secretary of Sate and the Minister should visit us in their first week in office. It is a heartening recognition for the tremendous work that our staff and volunteers put into improving our communities.”
21 May 10 -
Fraction of Ombudsman Complaints about Credit Unions
The Financial Ombudsman Service’s (FOS) Annual Report has once more affirmed the level of satisfaction members have with credit union services. Only one in every 66,000 complaints and enquiries received related to a credit union and only one in 11,700 complaints taken forward by the Ombudsman.
Whilst the number of complaints overall rose by around 30% complaints against credit unions dropped by almost a fifth. Just 14 credit union members raised complaints with credit unions.
Mark Lyonette, ABCUL Chief Executive, said: “Yet again, the FOS’s annual report has shown that credit unions provide their members with excellent customer service. For complaints against credit unions to be falling in a time of deep financial uncertainty and rising complaints overall is something to be proud of.”
21 May 10 -
Welsh Minister Urges Public to Join Their Credit Union
Welsh Social Justice Minister, Carl Sargeant, recently visited Cardiff and the Vale Credit Union signing up as a member and took the opportunity to call on more people to use credit unions.
He said: “Credit unions are a safe and affordable way of saving and borrowing money”
“I am delighted to see that many people in the Cardiff and Vale area are already taking advantage of the services on offer here and would encourage anyone who has not yet joined to think about doing so. I am a member myself and feel reassured that my money is safe and that trustworthy financial help and advice is available should I need it.”
The Welsh Assembly Government has made funding available to support the development of credit unions for many years, most recently for capital investment. Cardiff CU received a grant to invest in a new IT server with which to run their systems and which will transform the credit union’s activities.
Glenda Porter, Manager at the CU, said: “As our credit union has grown we have looked to offer more sophisticated products such as the Child Trust Fund and the new Saving Gateway but our IT systems were feeling the strain.
“This new server will provide that extra capacity to mean that we can serve many more members and provide all the products and services that people need.”
Credit unions in Wales have grown more than four-fold in the past decade and last year full-coverage was achieved meaning that every person in Wales has access to a local credit union.
Carl Sargeant added: “Establishing Credit union coverage across Wales has been a key Assembly Government commitment and I am delighted to see that we’ve achieved this. Members can access a range of financial services, from savings and loans to debt management, and I would encourage everyone to join their local credit union.”
21 May 10 -
Hull and East Yorkshire Credit Union on Facebook
Hull & East Yorkshire Credit Union (HEYCU) has become one of the first credit unions in the UK to set up a page on Facebook, the popular social networking site.
The brand new site has been designed and developed by Melisa Jackson of HEYCU's Member Services Team at their Central Office in Hull.
She said: "I hope it will create a greater presence and awareness of our Credit Union. Facebook is a fresh, friendly and modern way to encourage people to become more involved.
Facebook attracts quite a crowd and is becoming more and more popular so it would be a loss not to use this to our advantage."
HEYCU's Management Team are delighted with the launch of the new site, which provides another user-friendly channel of communication with the credit union's 7,000 existing members, as well as hopefully attracting more people to join the ever expanding credit union family.
"We should like to congratulate Melisa on designing such a useful facility. It positions our credit union as a young, dynamic organisation, always open to new ideas as it strives to provide not-for-profit financial services to the community of East Yorkshire. We shall continue to develop the site to reflect our growing product portfolio which now includes Child Trust Funds and will soon feature the new Saving Gateway," added John Smith, HEYCU Chief Executive.
On Monday (3rd May), the leaders of the 3 main political parties each outlined their vision for fairer financial services and a growing credit union sector in their speeches to the CitizensUK General Election Assembly at Methodist Central Hall in London.
CitizensUK is a collection of religious, community and voluntary groups who have come together to represent the interests of civil society and are campaigning on a 6 point manifesto. One key element of the manifesto calls for action to be taken against high-cost lenders and for third sector lenders – such as credit unions – to be supported to expand.
Questioned on whether Conservative plans to cap interest on store cards would extend to other lenders, David Cameron responded: “What we need to happen in this country is for credit unions to extend. There is a danger that if you don’t get the growth of credit unions that we all want to see then excessive extra regulation of private lenders will drive people to the loan sharks. We all know what we want, which is affordable, reasonable, proper credit for everyone in our country, especially the poorest. That’s what credit unions bring but we have to do this in a way that doesn’t drive people into the arms of people who are loan sharks.”
Asked how he would prevent families from becoming overindebted due to excessive interest rates, Cameron further emphasised the importance of credit unions: “That will depend on how successfully we roll out credit unions. The more you do that the more you can cap and clamp down on excessive charges.”
Outlining Labour’s policy for supporting the extension of affordable financial services, Gordon Brown, said: “Now we are the only party backing an interest rate cap on the most exploitative, high cost doorstep lending. We will expand the funding of credit unions and other community finance organisations. We will make loans and savings available everywhere through the Post Office. We will fund this with hundreds of millions of pounds raised through a community finance levy we are putting on the banks and we will turn the Post Office into the people’s bank so that no one is more than a few miles away from the banking services at the best rate that people depend upon.”
The Department of Business, Innovation and Skills recently outlined how plans to increase the financial services on offer at the Post Office would include a closer relationship with credit unions.
Putting the Liberal Democrat case in support of a Post Bank, Nick Clegg said: “I think there should be a cap on interest rates, on credit and store cards, and let’s make new credit available to people who have no access to credit at all let’s turn our post offices into a people’s bank, a post bank so that people who deserve credit can finally get it.”
ABCUL Chief Executive, Mark Lyonette, said: “Despite the charged political atmosphere during a hard-fought election campaign, these speeches demonstrate the universal appeal of credit unions.
“Supporting the development of credit unions into the future is vital for the financial well-being of many whoever should form the next government and these speeches are a welcome acknowledgement of that.”
The Building Societies Association (BSA) has published a report demonstrating that customer satisfaction in mutual financial services – such as building societies and credit unions – is greater than that in other financial services, such as banks.
Mutuals’ are organisations that are controlled by their customers or members who each have an equal say in the running of the organisation – one member, one vote.
The results of the annual Customer Satisfaction Survey echo those in 2007 and 2008 in that mutuals score better than their competitors on every aspect of service.
59% of respondents reported that they were either extremely or very satisfied with their mutual provider compared with only 47% of others. Similarly, 63% of mutual customers felt they were treated fairly compared with only 47% for non-mutuals.
Asked to respond to the statement: ‘Your provider can be trusted to give good advice’, a similar picture emerges – 59% agreed for mutuals and only 47% for banks. More than this, though, a third (33%) of customers of non-mutual financial services disagreed or strongly disagreed – more than twice as many as for mutuals (14%).
Mark Lyonette, ABCUL Chief Executive, said: “This report, as in 2007 and 2008, confirms what we have long-known, that mutuals – like credit unions – provide an excellent service to their members.
“High-quality, responsive service is at the heart of the mutual ethos and continues to drive the development of the sector.”
Drumchapel Credit Union in Glasgow – founded in 1970 – celebrated its 40th Anniversary recently.
Originally called the Western Credit Union, Drumchapel is widely acknowledged as being the first credit union to be established in Scotland. Today in Scotland, 1 in 20 people belong to their local credit union rising to 1 in 5 in Glasgow.
Drumchapel have recently applied to the FSA to extend their membership to cover anyone living or working in Glasgow.
Trisha Butler, General Manager of Drumchapel said: “We wish to place on record our thanks to those forward thinking and community spirited individuals who founded our credit union. Our thanks also go to all of our members who have helped make the credit union such a success.”
“In today’s economic climate, it is especially important to celebrate the excellent work of individual credit unions throughout Scotland who provide their members with a safe and secure home for their savings and a source of affordable credit.”
Pendle Community Credit Union (PCCU) opened the doors of its new town centre premises for the first time recently with its official opening exactly 28 years after the credit union was founded.
PCCU began life as Nelson Community Credit Union and was founded by Lou and Mary Gildea. Its first collection was housed in St Georges Parish Centre which holds a collection point to this day.
In 2005 Nelson Community Credit Union merged with neighbouring Colne and District Credit Union to form Pendle Community Credit Union.
Lou and Mary held the office of President and Treasurer for 22 years, before retiring as directors 25 years after registering. They were guests of honour at the opening of the new branch.
Today PCCU has 3,500 members with savings of over £1.8 million. It has loaned out over £15 million in over 10,000 loans. PCCU is now proud to have a professional and welcoming building for its members and spacious comfortable office space for its 50 volunteers and 7 members of staff.
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