Category Archives: Credit unions

City investors urged to help tackle illegal loan sharks

One of the country’s leading credit unions is urging City investors to invest in a deferred share scheme which aims to tackle the issue of loan sharks and illegal money lending head on.

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London Capital Credit Union based in Archway, which exists to help its members save and to lend them money when needed at reasonable interest rates so they can steer clear of payday lenders and loan sharks, is looking to expand.

Says Martin Groombridge, Chief Executive of the Credit Union: “We aim to raise £125,000 to £150,000 in additional capital through an issue of deferred shares. This will allow the continuing expansion of our lending as an alternative to loan sharks and other high cost credit providers. A social investment in deferred shares will have a significant positive impact on the communities that we serve, including those in the City’s poorest neighbourhoods.”

For some sections of the community, including the ‘working poor’, there are very few opportunities to access affordable credit. That’s where credit unions come in.

Regulated by the FCA and PRA, credit unions in the UK tend to operate in those areas of the market not well served by mainstream financial institutions. As members’ incomes are usually lower than average, a credit union’s main competitors are likely to be niche players offering high-interest loans to those with poor credit profiles.

London Capital Credit Union is a financial co-operative, owned and controlled by its members and providing financial services to communities across London. One of the country’s fastest growing credit unions, it has gone from 675 members and £493,000 on loan in 2008 to over 15,000 members and over £10.8m on loan at the end of 2018.

The Credit Union plays a significant role in alleviating poverty (as the Joseph Rowntree Foundation has identified) and has an ambitious expansion programme. It is looking to extend its services to tens of thousands more people, so as to reduce financial exclusion and the level of poverty in the community.

Social and financial impact

Increased use of credit unions could have a real impact on local communities. Analysts from a well-known City institution performed an assessment of the social and financial impact of London Capital Credit Union and concluded that, on average, for every pound lent to clear existing debts, members save £1.25 each year in interest, bank charges and fees.

A single investment in deferred shares provides ongoing benefits far beyond the amount invested. With the regulatory requirement for credit unions to hold capital representing 10% of their assets, an investment of £100,000 of deferred shares would allow £1 million to be lent and leads to £1.25 million in benefits to members in a single year.

Over four years, the Credit Union’s members could save some £5 million of loan costs. This is money that is likely to stay in the community, benefitting local businesses and supporting local employment.

Martin Groombridge adds: “The concept of social enterprise and social investment is tried and tested, proven to bring real benefits to our communities. The launch of our deferred shares provides social investors with a practical way of helping more people escape from high cost debt.”

Investors looking to make a difference to the local community can find out more and apply for shares here: https://www.ethex.org.uk/LondonCapitalCreditUnion.

London Capital Credit Union welcomes largest ever customer satisfaction survey

London Capital Credit Union, a not-for-profit co-operative which provides savings and low cost loans to people living, working or studying in Barnet, Camden, City of London, Hackney, Haringey and Islington, has welcomed a new report which found significant approval for the services offered by credit unions.

Martin Groombridge

Martin Groombridge, Chief Executive of London Capital Credit Union

The largest ever survey of credit union customers, published by Financial Inclusion Centre, found that 81% of members across the country were extremely satisfied or very satisfied with their credit union, while 84% said they would recommend a friend or family member. This compares to a recent Which? survey showing that mainstream banks’ average overall customer satisfaction score was only 68%.

These results support the feedback received from London Capital Credit Union’s own members. Results from the Credit Union’s 2017 annual survey show a very high overall level of customer satisfaction, with an average score of 9 out of a possible 10.

London Capital Credit Union is one of the fastest growing credit unions in the capital, with over 15,000 members and outstanding lending of nearly £12 million.

Financial Inclusion Centre research also demonstrated just how important the broad range of financial services being delivered by these not-for-profit financial providers are, with the majority of respondents using their credit union as an affordable and fair source of borrowing – giving them an invaluable alternative to high-cost credit such as payday loans, rent-to-own firms and door-step lenders.

Credit unions work hard to help their members understand financial issues and members are shown to score well compared to the general population on a range of financial capability measures, saying they feel they have their finances under control and are confident in dealing with money matters.

Martin Groombridge, Chief Executive of London Capital Credit Union, said: “The findings of the largest ever credit union customer satisfaction survey back up what we see at London Capital Credit Union and show that most members are extremely satisfied with the services provided.

“With the current pressures on household finances, credit unions such as ours provide an essential lifeline for many, offering affordable loans in time of need and supporting people to develop a saving habit. At London Capital Credit Union, we believe it is important to help people make the most of their finances and this survey shows the hugely positive contribution that credit unions make to our communities.”

Mick McAteer, Co-Director of Financial Inclusion Centre, added: “These results are very encouraging and go to show that credit unions are highly regarded by those that use them, with higher satisfaction rates than mainstream banks.”

A copy of the report, ‘An Insight into Credit Union Membership’, can be found here.

Local banking still very much alive in Scotland

ABCUL Scotland dev stage03Following the sad news that Airdrie Savings Bank is to close, the Association of British Credit Unions Limited (ABCUL) has pointed to Scotland’s thriving credit union sector as evidence that local banking is still very much alive and well.

ABCUL Chief Executive Mark Lyonette said: “Across Scotland, almost 100 credit unions are providing savings accounts and affordable loans to more than 387,000 people. Last year, the sector’s deposits, lending and assets all grew by 8%, and Scotland has the fourth highest level of credit union membership in Europe.

“Of course, credit unions must keep pace with what consumers expect from their financial service providers, which increasingly means instant access and control of our money via mobile devices.

“For smaller players like credit unions, the infrastructure to deliver this is often out of reach unless we act together to achieve the required scale. That’s why a number of credit unions in Scotland and across Britain are working co-operatively to develop and deliver the products, services and access channels that modern consumers expect.

“This way, credit unions can ensure a competitive, sustainable local banking option is always open to Scottish consumers as part of a healthy, diverse financial services sector.”

The latest figures from the Bank of England (as at 30 June 2016) show there are 99 credit unions in Scotland serving more than 387,000 people, including 56,000 junior savers. Credit union members have savings worth £484 million and are borrowing £296 million, often at lower interest rates than are available for the same loan from other lenders. The Scottish credit union sector’s assets are worth £562 million.

With 7.2% of the Scottish population using a credit union, Scotland has the fourth highest level of credit union membership in Europe, after only the Republic of Ireland, Northern Ireland and Poland.

International recognition for Islington Council and London Capital Credit Union

Islington Council and London Capital Credit Union recognised

Islington Council’s work in support of its local credit union is to gain international recognition as it hosts a group of senior managers from Singapore this week.

Richard Watts from Islington Borough CouncilThe group from the Singapore National Co-operative Federation will be greeted by the Leader of Islington Council, Councillor Richard Watts, at Islington Town Hall, before visiting the offices of the credit union in Archway.

The delegation will meet with representatives from Islington Council and London Capital Credit Union at the Town Hall and will hear how the council has supported London Capital Credit Union to become the success it now is and how this benefits residents across the borough.

The group will then visit the credit union to speak directly with members and staff about the credit union’s mission and the way it encourages saving and responsible lending to residents in Islington and beyond.

Cllr Watts said: “These are difficult times for hard pressed families in Islington and beyond, as many people deal with the rising cost of living.

“Multiple loans from payday lenders are a pathway to deeper poverty, and the council has taken action to support residents to avoid getting into problem debt.

“Part of this work has been to support London Capital Credit Union, as an accessible and affordable way for people to deal with their finances.

“I am very pleased to be supporting this organisation and the excellent work it does in Islington, and I look forward to meeting our colleagues from Singapore.”

Islington Council supports The London Capital Credit Union Ltd with a one-off grant of £250,000 and annual revenue support funding of £25,000.

Martin Groombridge, Chief Executive of London Capital Credit Union, said: “Credit unions are an ethical alternative to banks and other high street lenders and their way of working is designed to benefit all members.

“We are always pleased to be able to share our knowledge with others around the world and we look forward to meeting the delegation from Singapore and welcoming them to London, and to Islington in particular.”

Credit unions in Britain have been growing consistently over the past few years as they become better known and they now have almost 1.3 million members across the country.

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

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

Haringey resident says join your credit union to support your community

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

“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 Scotland logo ABCUL – 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.”

There are over 100 credit unions in Scotland serving 375,000 people who are saving £454 million and borrowing £276 million.

The Scottish Government report can be read here: http://www.gov.scot/Publications/2016/02/4045/0

 

London Capital Credit Union commits to London Living Wage

One of London’s largest member-owned financial businesses has become a London Living Wage employer to demonstrate its commitment to its employees.

The London Living Wage award marks the continuing commitment by London Capital Credit Union in Archway, where, regardless of whether they are permanent employees, third-party contractors or suppliers, everyone receives a minimum hourly wage of £9.40 – significantly higher than the current national minimum wage of £6.70.

The London Living Wage is set annually by the Living Wage Foundation and calculated by the Greater London Authority. It covers all boroughs in Greater London. The UK Living Wage for outside of London is currently £8.25 per hour. The UK rate is set annually by the Living Wage Foundation and calculated by the Centre for Research in Social Policy at Loughborough University.

Felix Hebblethwaite, a director at London Capital Credit Union

Felix Hebblethwaite, is a director at London Capital Credit Union

Felix Hebblethwaite, a director at London Capital Credit Union, said: “A key principle of the co-operative movement – of which credit unions are a part – is to champion the sustainable development of the communities in which we operate. At LCCU we believe that paying our employees appropriately is an important step forward in achieving this objective.”

Employers choose to pay the Living Wage on a voluntary basis. The Living Wage enjoys cross party support, with public backing from the Prime Minister and the Leader of the Opposition.

Living Wage Foundation Director Sarah Vero said: “We are delighted to welcome London Capital Credit Union to the Living Wage movement as an accredited employer.

“The best employers are voluntarily signing up to pay the Living Wage now. The Living Wage is a robust calculation that reflects the real cost of living, rewarding a hard day’s work with a fair day’s pay.

Added Felix Hebblethwaite: “We are proud to be a London Living Wage employer and we would encourage other employers within London to do the same.”

Find out more about London Capital Credit Union at www.credit-union.coop. Find out more about the Living Wage at www.livingwage.org.uk.

Credit unions join forces to serve military personnel

The Ministry of Defence has made it possible for three of the UK’s leading credit unions to join forces and make simple savings accounts and loans available to the Armed Forces and their families.

Johnson Beharry VC joining London Mutual Credit Union

Johnson Beharry VC joining London Mutual Credit Union

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.

The launch of this service is being marked with a celebration at the head office of the Royal British Legion in London on Thursday 15 October, which is International Credit Union Day.

A new website – www.joiningforcescu.co.uk – is also being 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.”

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

London Capital Credit Union logoLondon Capital Credit Union is looking for volunteers in the run up to Christmas as it deals with rocketing demand for its services. The credit union saw 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.