Credit unions
Trisha Jones, Helen Still and Peter Higgins write about a new Quaker-led survey
Many people want a loan and cannot, for many reasons, access the loan facilities at their local banks or building societies. It may be that they are not permanently employed, do not have a bank account, are a tenant (rather than a homeowner), have a county court judgement against them, or have a poor credit rating score. Sadly, too many of these people turn to local money lenders, the local Provident agent, one of the payday loan companies, or loan websites; all of whom charge exorbitant interest and ruinous late payment charges. Very often, such loans are rolled over into new, more expensive, loans.
A report entitled Department of Work and Pensions Credit Union Expansion Project Feasibility Study was commissioned by the House of Lords in 2012. It found that more than fifty per cent of people who have loans demanding very high interest payments have never heard about credit unions or how they operate, and an even higher percentage are unaware of their local credit union. A small group of Friends in North Wales Area Meeting, with support and help from Quaker Peace & Social Witness, are keen to encourage Friends to be active in supporting their local credit unions.
So, what are credit unions? They are local membership cooperatives that offer ethical, affordable loans and mutual and ethical savings accounts at rates that are competitive with banks and building societies. All the people who have savings or loans are the members of their credit unions, from whom the management board is elected by the membership. Each credit union’s members must have a ‘common bond’ – that is live in the local area covered by the credit union or have a common affiliation, for example, through employment. Time is spent with people who want loans in order to agree realistic repayment schedules. Credit unions are governed and regulated by the government’s Financial Conduct Authority and Prudential Regulation Authority.
Credit unions vary in shape and size. The current trend is for credit unions to grow larger by amalgamation (North Wales Credit Union now extends to within twelve miles of Swansea!) and use the internet for marketing and handling initial requests for loans in order to remain viable and sustainable. All credit unions are not-for-profit organisations and, although run by paid employees, all local credit unions are supported by volunteers in many and varied capacities: in the branch, in administration and marketing, and serving as directors.
Our group believes that credit unions can be a preferable ethical choice for those financially-excluded people who often fall prey to the legal and illegal loan sharks. We hope to encourage Friends and their Meetings to find out more about their local credit union and ask them how Friends can help their work. This might include opening a savings account with them instead of using the local bank.
Your Meeting might prefer to know that its money was being put to good use both ethically and locally – and receiving interest! Savings are protected just like bank savings. Your local credit union may want volunteers for a few hours each week. You might have people with skills they need or people who are willing to learn. Your credit union may need help with marketing their services. Remember that Friends also want personal loans at times – why not consider a credit union loan? Every credit union is different and has different needs.
As a first step, we are sending an invitation, via Local and Area Meetings, for individual members and attenders to take part in a survey that aims to establish the levels of current knowledge and involvement with their local credit unions. The survey results will be used to inform us how best to channel our energies in supporting Friends’ efforts in their local communities.
Further information:
Survey (English): http://bit.ly/CreditUnionSurveyEN
Survey (Welsh): http://bit.ly/CreditUnionSurveyCY
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