Category Archives: Finance

Credit unions can help solve poverty

A major new report on tackling poverty in the UK has highlighted the role that credit unions can play.

We Can Solve Poverty in the UK Report

The report, We can solve poverty in the UK, from research charity the Joseph Rowntree Foundation (JRF) offers a plan to end poverty in this country by 2030. It is the most comprehensive strategy of its kind to set out how to solve poverty across all groups in the UK, calling for a new ‘long term deal’ to solve poverty between governments, business and the public.

A role for credit unions is identified in providing fair and affordable access to credit, as well as in helping people to save, budget and avoid problem debt.

The strategy encourages employers to provide – and promote the take-up of – credit union membership as a staff benefit to promote saving and access to affordable credit, highlighting the ease with which employees can save and repay loans direct from payroll. It also calls for the expansion of credit unions’ capacity to provide affordable credit through support from employers, local government and social investors.

The report recommends that tackling poverty should be an explicit aim in social landlords’ business plans and strategies, arguing that: “Housing associations could play a role in delivering affordable credit to their tenants, as part of a wider financial inclusion strategy, working with credit unions where possible.”

Launching the strategy, JRF Chief Executive Julia Unwin said: “Poverty divides communities and generations; it harms people’s potential and strains families; it drains the public purse and holds back our economy. The Prime Minister has made a promise to make Britain work for everyone and reform capitalism. As Westminster reconvenes this week, I urge her to deliver on this promise.”

To mark the launch of this significant strategy, JRF has teamed up with Big Society Capital to work towards raising up to £20m of social investment to tackle the ‘poverty premium’, whereby people on low incomes pay more for goods and services including credit and financial products. The initiative will support charities and social enterprises to develop solutions.

Mark Lyonette, Chief Executive of the Association of British Credit Unions Limited (ABCUL), said: “We welcome the JRF’s recognition of the role credit unions play in helping alleviate hardship and poverty. Credit unions are proud to serve people from all walks of life, which includes those who may struggle to access credit and financial services from other providers. The expansion and modernisation of Britain’s credit union movement will make us even better equipped to provide services to people right across our communities.”

 

Haringey resident says join your credit union to support your community

A member of London Capital Credit Union is calling on Haringey residents to join their local credit union to help strengthen the local community.

Sue Hoyle“Unlike high street banks, credit unions are owned by local people and work for their best interests,” says Sue Hoyle.

Sue, a former care worker, has been a member of London Capital Credit Union for 20 years and says that credit unions are such a good idea that more people should know about them.

“I believe passionately in our local community and debt is a serious issue for many people. Credit unions can be part of the solution as they keep more of the money in the local community with local people.”

Credit unions work by offering loans on affordable terms to local members and the interest raised is then made available to lend to more people locally.

“I joined London Capital Credit Union to get a loan and thanks to the way the loan was structured, I was saving at the same time as paying the loan back.”

Encouraging saving and greater financial awareness is key to the way credit unions work. Says Sue, “I had a 0% transfer credit card some years back and paid back the minimum balance by standing order each month, but basically it was like giving them money for nothing as I was mainly paying off interest, so I used my credit union loan to pay off the credit card.”

Over the years Sue says she has saved a fair amount of interest by using the credit union and has used the savings to pay for car repairs and even a holiday.

“I am just one person,” says Sue, “but, across Haringey, local people have saved over £2.9 million in loan repayments by being members of the credit union. That’s something to shout about.”

Scottish Government backs call for workplace savings

ABCUL logoABCUL – the Association of British Credit Unions Limited – has welcomed the Scottish Government’s backing in its campaign to make access to credit union savings and loans a standard workplace benefit.

A new report – “Scotland’s Credit Unions: Investing in our Future” – published on 10 February outlines the Scottish Government’s support for making payroll deduction partnerships between employers and credit unions as popular in Scotland as it is in other countries like the United States.

ABCUL Chief Executive Mark Lyonette said: “It’s no coincidence that the world’s most successful credit union movements have close links with employers, making saving and repaying affordable loans really easy for people via payroll deduction.

“We’re delighted that the Scottish Government has responded to our call to make access to credit unions a standard workplace benefit, and we look forward to Scotland becoming a Credit Union Nation where employees, businesses and the wider economy all benefit from a more financially healthy population.”

The First Minister of Scotland Rt Hon Nicola Sturgeon MSP has written a letter to employers highlighting the benefits of working with credit unions.

Nicola Sturgeon writes: “The Scottish Government recognises the valuable role played by credit unions in building financial health by providing financial services and products to a wide range of customers.

“So I am urging employers across Scotland to get in touch with a credit union to explore establishing a payroll deduction relationship with a view to improving financial health and boosting the productivity of Scotland’s businesses.”

The Scottish Government report can be read here.

New credit union services for armed forces personnel

Johnson Beharry VC joining London Mutual Credit Union.

Johnson Beharry VC joining London Mutual Credit Union.

Three of the UK’s leading credit unions have joined forces to make simple savings accounts and loans available to the Armed Forces and their families.

The arrangement means that Armed Forces personnel will be able to save regularly or repay loans with a credit union via payroll deduction. Family members and retired personnel in receipt of a pension are also eligible to join.

A new website – www.joiningforcescu.co.uk – has also been launched with details of the services offered to Armed Forces personnel by the three credit unions and links to join.

Over the years, Armed Forces personnel have reported difficulties accessing credit because their job involves moving regularly and it can be challenging to build a good credit rating. For this reason, some personnel have reported being actively targeted by high cost lenders.

The appetite to facilitate regular saving and affordable borrowing for Forces personnel saw the Government exploring payroll deduction partnerships with credit unions, and following an application process, three of Britain’s largest and most successful credit unions – Plane Saver Credit Union, Police Credit Union and London Mutual Credit Union – have been selected to offer this service to Forces personnel.

Police Credit Union Chief Executive Peter Evans said: “The three credit unions are honoured to offer our services to Armed Forces personnel, and it is a great example of credit unions working co-operatively with each other and with the Ministry of Defence to deliver a service to the men and women of the Armed Forces.

“Joining a credit union gives military personnel access to regular savings and affordable credit with a financial services provider that understands their job and their lifestyle. Our credit unions can help them stay on top of their finances and steer clear of high cost lenders.”

Minister for Defence Personnel and Veterans Mark Lancaster MP said: “I’m delighted that credit union services will today be available to Armed Forces personnel. It is crucial that those service people who work so hard to keep Britain safe, both at home and abroad, can access easy and affordable ways to save and borrow.

“This helps to tackle an issue that has caused disadvantage and disappointment to some service members.”

One of the first people to join a credit union under the new arrangement is Lance Sergeant Johnson Beharry VC. Lance Sergeant Beharry – who became the first living recipient of the Victoria Cross since 1969 for saving the lives of his comrades in Iraq – has joined London Mutual Credit Union.

Johnson Beharry VC said: “I am pleased to join London Mutual Credit Union and I look forward to spreading the word about this new scheme for military personnel. It is often difficult for people in the Armed Forces to gain access to financial services, especially those serving overseas who have little or no way of getting credit in the UK. By joining a credit union, Armed Forces personnel will be able to access affordable loans when they need them and to plan for the future by saving directly from their pay packets through payroll deduction.”

A credit union is a financial co-operative which provides savings, loans and a range of services to its members. Credit unions share the co-operative ethos of people helping people, and because they are owned by their own users and not by external shareholders or investors, the emphasis is always on providing the best service to members; not maximising profits from them.

Internationally, credit unions have a proven record of providing services to Armed Forces personnel. The largest credit union in the world, Navy Federal Credit Union, has offered savings, loans and a range of financial products to members of the United States Armed Forces and their families since 1933. Today, the credit union has around 5.7 million members across America and assets of $70 billion.

Stay up to date with all the very latest news via www.twitter.com/JoiningForcesCU.

Credit union calls for volunteers to help with soaring demand

LCCU logoLondon Capital Credit Union in Islington is looking for volunteers in the run up to Christmas as it deals with rocketing demand for its services. The credit union saw its membership increase by 10% in September alone.

This follows a recent call by Sir Hector Sants, the former Chief Executive of the Financial Services Authority, who now heads up the Church of England’s taskforce on credit unions, asking people with a professional background to consider volunteering for a credit union or standing for election to the board, in order that credit unions can benefit from a wide range of expertise and ability.

Martin Groombridge, Chief Executive of London Capital Credit Union, says: “We are experiencing a high level of demand for our services at the moment, and this is likely to increase further in the run up to Christmas – our busiest time of year. So we are looking for people with a wide range of skills to donate some of their time to help us.”

As financial co-operatives, credit unions are owned and controlled by their members and rely on local volunteers to help deliver their services to the community.

“Our volunteers get involved with the day-to-day running of the credit union,” explains Martin Groombridge. “Duties include customer services, handling phone enquiries, processing membership applications, helping to maintain our database and working on marketing materials.”

Sir Hector also called for more people to deposit money with a credit union – money which can then be lent out at an affordable rate of interest to help those in need. Those who save with a credit union then qualify for a share in the profits of the credit union in the form of an annual dividend.

Sir Hector’s comments came as the Church of England rolls out its programme to provide financial support through its new Credit Champions network across 2,000 churches. The initiative encourages church congregations to promote saving as an alternative to borrowing and to raise awareness of the role of credit unions in providing low cost loans in times of need. London Capital Credit Union is working with a number of churches across North London as part of the scheme.

London Capital Credit Union receives highest Fairbanking Mark from The Fairbanking Foundation

The Fairbanking Foundation – the not-for-profit charity dedicated to encouraging banking institutions to improve the financial well-being of their customers – has awarded its first Mark certifications to credit unions with London Capital Credit Union receiving 5 stars for its personal loan products.

London Capital Credit Union had to demonstrate that its personal loan customers have experienced a tangible positive impact on their financial wellbeing from using their products.

Martin Groombridge

Martin Groombridge

Speaking about the award of the 5 star mark, Martin Groombridge, CEO, London Capital Credit Union, said: “Our focus is always on our members, which is why 76% of our personal loan customers interviewed by the Foundation said that they had one or more other products with us. It is not just about offering competitive and transparent products, but also a range of features and services that help people manage their money better.

“Many in the financial services industry are too obsessed with getting into best-buy tables, but to do this transparency can often be lost with many products offering short term “teaser rates” that can quickly get expensive. People with these products can end up worse off than if they chose another product that takes a more holistic approach to helping customers with their money.”

Fairbanking’s assessment also reviews the provider’s complaints procedures and experience for the product in question. Antony Elliott, Chief Executive of Fairbanking Foundation said: “Our quality mark programme is an important step in helping customers to identify products that have been rigorously tested for the financial well-being they can deliver. Crucially, it also provides a powerful incentive for financial institutions of all sizes to compete through continual improvement of their products in ways that will truly benefit their customers.”

Over the last ten years, London Capital Credit Union has seen a 1,400% increase in members’ savings from £436,000 to over £6 million. And as co-operative, London Capital Credit Union is owned and controlled by its members – not outside shareholders.

Find out more at www.credit-union.coop.

Bigger Together – Navigate the World of Social Business

Bigger Together EventsBig Issue Invest Corporate Social Venturing (CSV), First Ark, Fusion 21, Places for People and the University of Northampton will host ‘Bigger Together’ – Navigate the World of Social Business, a series of events taking place in Manchester, Liverpool, Newcastle and Northampton across March.

These events are intended for those who own, manage or play a very hands on role in the running of social businesses and are aimed at bringing social businesses of all stages together. Offering much more than a list of potential finance options, there will be entrepreneurs on hand at the events to talk through their experience of handling investment.

While finance is a vital element to business development, there are many other factors needed to attain success. The events provide an opportunity for those businesses creating a social impact to meet social investment managers, sector specialists and an array of experts from health, education, housing associations, enterprise bodies and the legal field. There will also be the chance to network with other like-minded social entrepreneurs.

The events will take place as follows:

  • Manchester – Wednesday, March 4th, 2015, 1.30 – 5.00 PM
  • Liverpool – Thursday, March 12th, 2015, 1.30 – 5.00 PM
  • Newcastle – Tuesday, March 17th, 2015, 2.00 – 5.30 PM
  • Northampton – Wednesday, March 25th, 2015, 1.00 – 4.30 PM

To find out more and to book your place, register here.

New scheme helps schoolchildren save

Martin Groombridge

Martin Groombridge

Hundreds of secondary school starters in Haringey have a opened a free £20 credit union savings account as part of a landmark financial awareness scheme by Haringey Council.

Application packs have been sent to nearly 3,000 Haringey pupils starting Year 7 this term for a School Savers account with London Capital Credit Union, with nearly 200 students already signing up.

The council-funded scheme, the first of its kind in England, is designed to encourage children to get into the savings habit and promote alternatives to unscrupulous payday loan companies.

Accompanied by financial management lessons in schools, accounts are ‘locked in’ for two years, with students and their parents encouraged to add to their savings where possible.

Councillor Joe Goldberg, Cabinet Member for Economic Development, Social Inclusion and Sustainability, said: “We want our children to be given every opportunity to learn about money and the different financial options available as they grow up.

“Giving every Year 7 child an account with a responsible credit union will give them a chance to start saving early on in life and understand the alternatives to the scourge of legal loan sharks colonising our high streets.”

Haringey Council has provided £750,000 in loans to the credit union in the last two years, which has more than 3,000 members in the borough – and the fastest growing contingent of anywhere in London.

The credit union – a co-operative that is owned and controlled by its members – has issued affordable loans worth almost £1 million since October 2012 and holds more than £1 million in savings from Haringey residents.

Martin Groombridge, Chief Executive of London Capital Credit Union, said: “We are very pleased to be working with Haringey Council in this way to encourage children to learn the importance of saving and budgeting.

“This monetary incentive is a fantastic way to get Haringey children to open savings accounts and for their families to benefit from the services of the credit union.”

Every Year 7 child who lives in Haringey or attends a school in the borough is eligible for an account, which can be opened by simply returning the application form sent to all pupils.

For more information and to download a copy of the application pack, visit www.haringey.gov.uk/creditunion. To find out more about London Capital Credit Union visit www.credit-union.coop.

Cap on the cost of credit will help consumers

This map shows the geographic spread of payday loan clients by local authority area.

This map shows the geographic spread of payday loan clients by local authority area.

The new cap on the total cost of credit is an important step towards protecting consumers from the debt trap of excessive interest rates and charges, says Citizens Advice.

The Financial Conduct Authority, which regulates payday lenders, has announced a 100 per cent cap on the cost of credit, meaning that from January no borrower will have to pay back more than double their original loan.

New research from Citizens Advice reveals the payday loan hotspots across England and Wales.

In depth analysis of a sample of 30,000 serious debt clients, 3,500 of whom had payday loans, finds:

  • North East and West Midlands are payday loan hotspots
  • The top three areas for clients with payday loans are in the North East: Northumberland has 107 cases, County Durham has 84 cases and Newcastle upon Tyne has 83 cases
  • People in South Tyneside have the highest average payday loan debt at £1,122
  • People in Newcastle upon Tyne have more payday loans per person than anywhere else in the country.

Gillian Guy, Chief Executive of national charity Citizens Advice, said: “This cap means payday lenders can no longer force borrowers into an endless spiral of debt. This is a real improvement. People have sought help from Citizens Advice after their payday loan of £300 ballooned to over £2,500 worth of debt. The cap will help to stop these serious cases in which sky high interest and extortionate fees turn a small loan into an unmanageable debt.

“This is a step towards fixing a market that hasn’t been working for consumers. Payday loan firms should only lend to people who they know can afford to pay back the debt, and must point those who can’t towards free debt advice.

“People who are in a position to borrow need a responsible short-term credit market. A vital part of this is greater choice. High street banks should seize the opportunity to meet demand and offer their customers a better alternative to payday loans.

“The FCA should monitor the cap, including whether it is set at the right level, to make sure it is working for consumers. They must also keep a close eye on whether lenders are sticking to the rules. Problems with high cost credit go well beyond payday loans. We’re concerned about the serious problems people are reporting with products like logbook and guarantor loans.  As the new rules force payday lenders to treat customers more fairly, these other areas must be given more attention.”

New text messaging service makes managing money easier

Martin Groombridge, Chief Executive of London Capital Credit Union

Martin Groombridge, Chief Executive of London Capital Credit Union

A new text messaging service from London Capital Credit Union will help savers and borrowers keep track of their money by allowing them to find out their account balances using their mobile phone.

The locally-owned credit union offers people in the area both savings accounts and affordable loans and the text balance service is one of a number of ways that London Capital Credit Union is making managing money easier. Members can already access their accounts online and a new mobile app is due to be launched later this year.

By texting the words “mybalance” to the credit union at any time, credit union members who have registered their mobile phone numbers can receive a text message listing their account balances. Balances are updated in real time, meaning loans, savings accounts and membership account balances are all shown on the text service.

Martin Groombridge, Chief Executive of London Capital Credit Union, said: “Staying in control of your money is easiest when you know how much money you have in your account so we are pleased to be able to introduce this new service to help our members manage their money.

“Our new text messaging service is available 24 hours a day so members can check their balances at any time. Texts are charged at standard rates and it is free for members to receive their balance information.”

Martin added: “We like the human touch and are proud of the advice we can give to our members face to face, but we know there is a role for modern technology to help members keep track of their own finances.”

London Capital Credit Union is a not-for-profit co-operative dedicated to promoting saving and dealing with debt. Established in 1962 it provides secure savings and low cost loans for anyone living, working or studying in Barnet, Camden, City of London, Hackney, Haringey or Islington.

Find out more at www.credit-union.coop.