CFCFE releases research on credit unions and Covid-19

Tuesday 16 January 2024

New research from the Centre for Community Finance Europe (CFCFE) looks at how credit unions in Britain have continued to serve members during the Covid-19 crisis. The Credit Union Difference: Responses to COVID-19 in Great Britain report is based of responses from 24 British credit unions and support organisations and covers March and April.

It reveals various responses determined by the needs of populations served including London Mutual Credit Union who has kept all its branches open to support those requiring access to cash over the counter for their daily needs. Central Liverpool Credit Union and Smart Money Cymru opted for partial closures. Similarly, NHS Credit Union, which does not have a branch outlet, has introduced a ‘Mobile CU’ in Glasgow where its head office is located, so it can remain available to members.

For some credit unions, the pandemic has resulted in a rapid digitisation, adds the report. For example, Central Liverpool Credit Union has introduced electronic signatures. Its online offer has also been upgraded so members can access loan applications more easily and view and manage their balances at home. It has also introduced online chat assistance – as has Clockwise Credit Union; both have the service managed by staff rather than bots.

Several new products have been introduced to support key workers, adds the report. These include key worker loans at preferential rates at Clockwise Credit Union and Just Credit Union; London Mutual Credit Union is offering NHS staff free overdrafts up to £2,000 on their current accounts for three months.

Another tendency revealed by the report is flexibility on underwriting. At Central Liverpool Credit Union, the maximum loan amount available at the entry level for new members and those with few savings has been increased from £1,000 to £3,000, and at TransaveUK from £500 to £1,000. Likewise, London Mutual Credit Union has increased pre-approved overdraft limits on its circa 9,000 current account holders.

As co-operatives, credit unions are concerned about the wider community. According to the report, Enterprise Credit Union has donated £500 to four community groups so far and is planning to help two organisations per week. A charitable fund sponsored by Plane Saver Credit Union has also made donations totalling £5,000 to the British Red Cross, Shelter, the NHS, the Trussell Trust and the Victory Services Club. Likewise, Plane Saver Credit Union itself has made available car parking spaces to key workers.

The research argues that the pandemic has demonstrated the societal importance of the values on which the sector is based as well as the willingness and capacity of many in the sector to speedily change and upgrade operations and service delivery in the interests of members in crisis.

“For credit unions, as for society at large, there will be no going back to a time pre Covid-19,” the paper warns. “An evident follow-on CFCFE paper from this one, once the pandemic has subsided, must be on credit union learning through this crisis and how this learning will strengthen the sector into the future.”

ABCUL CEO, Robert Kelly said: “I speak on behalf of everyone at ABCUL when I say that credit unions across the country have been shining lights in their communities, leading by example and following the movement’s ethos of ‘People helping people’ during these times of crisis

“We’re delighted this has been highlighted in the CFCFE report and it brings me great pride when reading examples of how our movement and ABCUL has responded during this period of great uncertainty. Since the beginning of lockdown, the Association has done its utmost to ensure the emerging needs of our member base, and the sector in general, are met as robustly as possible.

“ABCUL has hosted online conference sessions with credit unions from all over Britain to identify issues of emerging concern and ensure these are addressed in a strong and effective way.  We remain wholly committed to supporting our members in navigating the months ahead.”

The report was written by Dr Paul A. Jones, Nick Money and Ralph Swoboda. A forthcoming CFCFE report will focus on the actions taken by credit unions in the Republic of Ireland.

You can download a copy of the report here.

Source – Coop news