Vol. 13 No. 1 March 2011

Launch of research encouraging saving in secondary schools Page 3

World Conference comes to Glasgow Page 9

Covering the capital with credit unions Page 10

Saving made simple Safe and convenient credit union solutions for savers See page 4

Members’ Newsletter Supported By: EDITORIAL The importance Welcome of saving

SAVING IS an essential part of the credit union business model. The vast majority of credit union loans are map is filling up fast as new areas gain access to made from members’ savings and, as these are credit union services. As the longest serving invested back into communities, credit unions member of ABCUL staff, still with the Association need to make it easy and convenient for members after over 30 years, Peter Bussy is ideally placed to save. Credit unions do this in a variety of ways, to explain how these changes have happened. as we show on pages 4 to 8. At the other end of the country, one of the When the new largest unserved legislation comes in, it geographical areas is will be easier for credit Making savings without credit union unions to set up and access no more, as the develop new ‘‘easy is the key to Western Isles Credit partnerships to make Union has expanded to saving easier for many encouraging good become Hi-Scot Credit more people. One of Union – serving the the reasons we lobbied savings habits and we Highlands and Islands for more flexibility for in Scotland – including credit union savings look forward to seeing Shetland and Orkney. was so employees of This and the recent national companies this practice grow in activity in London are could be added into just two examples of the common bond of years to come. how credit unions are credit unions without reaching out to more the need for them to people. And that’s fit tidily into a geographical area. before the new This will mean that the benefits of payroll legislation – which’’ I hope I will be welcoming in deduction, as outlined on pages 4 and 5, can be the next edition of Credit Union News – comes in. made available to many more people, and these I look forward to even more activity and growth savers too will not miss the money, as it will be in once credit unions are free to add new groups to their savings before they get paid. Making savings their common bond, helping many more people easy is the key to encouraging good savings get the savings habit the easy, ethical and habits and we look forward to seeing this practice convenient way, with a credit union they own grow in years to come. and control. The Welsh Assembly Government, in its new Credit Union News is published by credit union action plan (see page 15), has Association of British Credit Unions Ltd, committed to making sure all public sector Holyoake House, Hanover Street, employees can access credit union services Manchester M60 0AS. E-mail: [email protected] through payroll deduction and we would Tel: 0161 832 3694 encourage Scottish and UK Governments to Fax: 0161 832 3706 follow suit. Like most habits, the earlier you start them, the ABCUL has made every effort to ensure that the information in this easier they are to keep up. That’s why the work magazine is correct, but we cannot that credit unions carry out in hundreds of accept any responsibility for any schools is so valuable. This was given a high omissions or errors. profile at a reception hosted by the All Party The views expressed do not Parliamentary Group on Credit Unions before necessarily reflect the views of ABCUL. Christmas, when we launched a research report Editorial co-ordination by funded by Home Retail Group which contains a Ethos public relations. number of recommendations for how credit www.ethos-pr.com unions can work in secondary schools. Design & print by The first credit unions in Britain were formed in ICM Creative Communications Ltd. London back in 1964 and 47 years later the www.icmcreative.co.uk capital still has areas where credit union services are not available. But this is changing fast, as we Printed on 80% recycled paper containing 60% post-consumer waste outline on pages 10 and 11. There are many Mark Lyonette, successful borough wide credit unions and the Chief Executive, ABCUL.

2 Credit Union News / March 2011 NEWS Launch of research encouraging saving in secondary schools NEW RESEARCH encouraging saving in secondary schools was launched by ABCUL at an All Party Parliamentary Group on Credit Unions reception in December.

MPs, credit unions, and representatives from banks and businesses, gathered at the House of Commons for the launch of the new research report. The report sets out recommendations for creating successful and sustainable partnerships between secondary schools and credit unions that allow young people to build their financial skills through practical experience of money management. The aim of the research, which was carried out by ECOTEC Research and Consulting and sponsored by Home Retail Group, was to identify what works and why in terms of credit unions and schools working together at Key Stages 3, 4 and 5. The scope of the study included both state and independent schools, and pupils aged 11 to 18. This includes Year 7 to 13 in England and Wales, and Primary 7 and above in Scotland. From left to right: Mark Lyonette, Chief Executive of ABCUL; Michelle Smith, Head of Barclays UK Consumer & Community Promising Affairs; Steve Webb MP, Pensions Minister; Cathryn Cotterill, Head of Regulatory Compliance, Home Retail Group; Damian Hinds MP, Chair of All Party Parliamentary Group on Credit Unions. The overall conclusion was that there are strong grounds for ABCUL to organisations such as credit unions can research showed that credit unions, support credit unions to work in actively help people take control of with their ethical and co-operative partnership with secondary schools. their lives.” credentials, are particularly welcomed The results of the study showed that The report was sponsored by Home by school staff as an alternative to the credit union projects are both viable Retail Group as part of their ongoing role of high street banks in supporting and worthwhile in secondary schools, programme to support the local and financial education within the with promising evidence of positive national communities in which they curriculum.” outcomes of pupils’ money operate. Home Retail Group is the A copy of the report is available for management, confidence and UK’s leading home and general download at: communication skills. merchandise retailer which sells www.abcul.coop/media-and- Speaking at the launch, Minister for products under two distinctive and research/research/creditunions Pensions Steve Webb MP said: "The complementary retail brands, Argos andschoolsreport Government is working hard to and Homebase. reinvigorate credit unions in Britain, Cathryn Cotterill, Head of but we recognise that a number of Regulatory Compliance at Home Retail Summary of conclusions groups have a role to play in Group, said: “We are excited by the I Credit union projects are shown to be viable and expanding credit union services possibilities of giving young people an worthwhile in secondary schools, with promising including banks, the private sector, opportunity to ‘learn through doing’, evidence of positive outcomes of pupils’ money charities and organisations such as making real decisions about managing management, confidence and communication skills ABCUL. As Pensions Minister I have a their finances. We hope that this I natural interest in encouraging saving, report will encourage credit unions to There is a growing interest amongst credit unions to work and this research is a welcome form successful partnerships with with schools, reflecting new opportunities in the addition to the debate." secondary schools so that pupils can curriculum Damian Hinds MP, Chair of the APPG benefit from active participation in I Once awareness is made, school staff are supportive of on Credit Unions, added: “The research such schemes.” partnerships with the ethical and community roots of highlights the valuable role that credit Mark Lyonette concluded: “There is a credit unions unions can play in teaching secondary growing interest amongst credit I In order to develop effective partnerships with schools, school children the importance of unions to work with secondary particularly in the secondary school environment, credit money management. This schools, which reflects new union capacity building would be necessary. demonstrates how community opportunities in the curriculum. Our

Credit Union News / March 2011 3 FEATURE Saving made simple CREDIT UNIONS offer a wide range of savings products to suit the many different needs of members. From Christmas to holidays, education to budgeting, credit union savings products are safe, secure and simple to use. With the benefit of payroll deductions for employees, many members can save without even thinking about it, and there are plenty of other ways people can save conveniently and easily. A sample of ISA rates in 2010 shows that credit unions paid an 77% Junior Savings average of 2.9% dividend, which is competitive with or better than many 61% Christmas Savings high street bank savings rates. In order to encourage local 23% Budgeting residents to open Savings accounts offered credit union by ABCUL credit unions accounts and start saving, 27% Other The latest ABCUL policy survey shows which savings Nottingham accounts are offered by ABCUL credit unions Credit Union for example, 0 Percentage 100 has set up partnership entered into a prize draw to win £50. a £5 voucher. During the six months projects with New tenants of East Midlands after they open their account, their three local Housing Association are offered a savings balance up to £30 is matched by social housing voucher worth £5 to open a savings Affinity Sutton. providers. account at NCU. They then have one NCU Chief Executive Irene Smith says: Tenants of month to go into the credit union and “Our local housing associations are very Nottingham open their account. supportive and these schemes aim to Community From 15 November 2010 to 31 help encourage savings amongst their Housing Association January 2011, Affinity Sutton residents in tenants, whether it is for a rainy day or a aged 16 or over are Nottingham were able to join NCU with special occasion.” eligible for a £10 voucher to open a savings account at Savings take off at Plane Saver NCU. Any tenants who NEIL ASTLEY works for British Airways as cabin crew, travelling start saving regularly are also all over the world on short and long haul flights out of Gatwick Airport. He has been a member of since 2002 and pays into his account using payroll deduction. Neil came across Plane Saver by chance when he saw their stand at Jubilee House, where BA staff at Gatwick report in for work. Neil was attracted by the competitive interest rates on their loans and the decent returns on savings, so decided to find out more. He opened a savings account with Plane Saver and pays in a regular amount each month using payroll deduction. “Payroll deduction is ideal,” says Neil. “There’s no stress as the money is taken straight out of my salary – there’s no messing about with cheques or transfers, Neil Astley. which I would forget to do. I’m saving a bit each month without really thinking about it and the money is there if I need it.” Neil, who has been flying for 16 years and with BA since 2000, does all his transactions with the credit union either online or over the phone. “It’s nice to be able to log on and see how much I’ve saved,” he explains. “It can be a pleasant surprise to see how the money has built up.” Neil adds: “Plane Saver is fantastic – they offer great rates of dividend on savings and they’re a very friendly bunch of people!”

4 Credit Union News / March 2011 FEATURE Payroll deduction PAYROLL DEDUCTION is a convenient way for employees to save with a credit union, as the money is deducted from their pay packet by their employer, before it gets to their bank account. This means that the payment is less noticeable and people are less likely to spend the money instead. It is also beneficial for the employer and the credit union.

By making a regular contribution performance, health and happiness. It’s a savings soon build up and many win-win situation.” What are the key reasons you choose employees are pleasantly surprised when London Fire Savers Credit Union to save with Police Credit Union? they get their annual credit union serves London Fire Brigade employees statement to see just how much money and their families and Brigade Watch Survey completed as a hard copy they have saved. Enabling employees to Manager Richard Melrose is a member. manage their money in this way can “The advantage of being a member of Payroll Deduction 81.0% help to reduce financial stress and debt London Fire Savers Credit Union,” says problems, which can have a knock on Richard, “is that it has given me the effect on performance and wellbeing, flexibility of being able to save at my Friendly, informative staff 62.0% which is good news for the employer as own pace knowing that in this well as the employee. financial climate, my money is secure Research by Police Credit Union shows and in a fund that ultimately helps Not-for-profit ethos of a credit union 54.7% that the key reason their members other members.” choose to save with the credit union is Easy access withdrawals 47.3% the option of payroll deduction. As the Benefits charts show, over 80% of their members A wide range of employers already put this first in a 2010 survey, rising to recognise the benefits of a credit union Favourable rates 44.2% over 90% for those who completed the and have set up payroll deduction survey online. schemes for their employees. Manchester City Council works with Online access 23.6% Efficient Manchester Credit Union to offer a Peter Evans, Chief Executive of Police range of credit union services for its Local branch convenience 15.5% Total responses: 258 Credit Union, says: "Payroll deduction is staff, including savings and Christmas a marvellous facility to have available, club accounts, affordable loans and not only for members but also for insurance products. Savings can be taken Survey completed online management of a credit union. directly from salaries each month through payroll deduction. “Members are able to save and make Payroll Deduction 90.9% their loan repayments without any Executive member for finance and thought beyond the initial authorisation human resources at Manchester City to allow deductions from pay. It means Council, Councillor Bernard Priest, says: Friendly, informative staff 51.5% that the net pay they receive from their “We take the financial wellbeing of our employers already has the deductions staff seriously, and having access to made and the members do not have to Manchester Credit Union is one way Not-for-profit ethos of a credit union 48.5% concern themselves about making they can get independent financial arrangements to pay or make allowances advice and services.” Easy access withdrawals 48.5% for money to be available for the savings or loan repayments. Difference “The credit union can operate so Brian Souter, Chief Executive of Favourable rates 45.5% much more efficiently and confidently, passenger transport company being able to plan and budget for Stagecoach, says: "Credit unions can help specific amounts of money to arrive at people take control of their money. They Online access 30.3% set times each month, all electronically. provide a flexible way of saving and if The normal fluctuations on monthly employees are better equipped to make money inflow that a business would sound choices when looking after their Local branch convenience 6.1% Total responses: 33 expect are no longer a major issue." money and their future financial ©Police Credit Union Plane Saver Credit Union serves British security, it can make a real difference to Airways employees and the credit their lives.” payroll partners once it becomes legal union’s CEO David McMullan says: “As Hull and East Yorkshire Credit Union to include all their staff within our well as providing access to saving is looking forward to the introduction common bond.” straight from payroll, we help BA staff of the new credit union legislation in www.policecu.co.uk manage their money more effectively. 2011, as it will provide a major This can only be good for the company, opportunity for it to expand and offer www.planesavercu.co.uk as it helps prevent employees getting services to a wider field of members. www.firesavers.org.uk into financial difficulties, which could Manager John Smith says: “There are have a negative effect on their work firms that will most likely sign up as www.manchestercreditunion.co.uk

Credit Union News / March 2011 5 FEATURE

FOLLOWING THE collapse of the Farepak hamper company in 2006, which left thousands of people, who had been sensible enough to save up for Christmas, without their hard earned savings and unable to get fair compensation, many credit unions set up their own Christmas savings accounts. Christmas saving

Unlike the Farepak scheme, credit or voucher schemes, they pay out in including Glasgow, Nottingham, union Christmas savings accounts, like cash rather than in food or vouchers to Ipswich and Suffolk and Hull and East all credit union savings products, are spend at a particular store. Yorkshire. safe and secure as they are covered by It is estimated that between 60% Glasgow Credit Union has been the Financial Services Compensation and 70% of credit unions offer special running its Christmas Savings Club Scheme. One of the benefits of a Christmas savings accounts. Some of since January 2007. It was set up as a credit union Christmas account is that, the biggest and most successful direct result of the collapse of Farepak. unlike many other Christmas hamper products are from credit unions Many of their members were also Christmas club funds festive spending for work colleagues in Hull FAY BAKER and her work In 2010, HEYCU’s Christmas could be used for presents too. The colleagues at the Humber Savings Club paid out a record number of savers also grew yearly so Bridge – the UK’s longest £230,000 plus a 2.5% dividend bonus we had to find somewhere safe to suspension bridge – are just to 500 members. Fay Baker explains keep the funds. That is where the some of those who have how employees at the Humber Bridge credit union came in. got involved. “Christmas can be a stressful time benefited from Hull and “Originally each staff member but by saving up a little each week, East Yorkshire Credit saved £2 a week towards the office the financial pressure is lighter. By Union’s (HEYCU) Christmas Christmas party, but this eventually saving with the credit union we Savings Club. grew to the point where the savings managed to accrue enough dividend for some bottles of wine for our office party!” Dividend is added to all HEYCU Christmas Saver accounts on 31 October and then the funds are available to draw at the credit union’s offices. Fay adds: “Other Christmas clubs use your cash and give back vouchers or food hampers, but we like to have cash so that we can choose where to spend. The credit union offers us this flexibility.” HEYCU introduced its Christmas Savings Club after Farepak collapsed. John Smith of HEYCU says: “Our Christmas Club has been growing in popularity every year and we are pleased to be able to help our members to manage their money wisely in this way.” www.hullandeycu.co.uk Fay Baker (back row, far left) and her work colleagues.

6 Credit Union News / March 2011 FEATURE

Farepak savers who were hit hard when that company went bust. Marketing and Communications Ipswich pensioner’s Executive Hayley Street says: “Some members had to use their credit union savings to pay for Christmas 2006 – money that they had allocated to Christmas savings other expenses such as holidays. Others had to borrow from the credit union to cover the cost of Christmas.” boost brings joy Glasgow CU now has over 600 Christmas Savings Club members who THANKS TO Ipswich and Suffolk Credit Union’s Christmas all have other accounts with the Savings Club, pensioner Margaret Holmes managed to save up credit union. The total saved by enough to cover her Christmas costs. Glasgow Credit Union members At the beginning of last year, a cover my Christmas costs and buy including Christmas Savings Club volunteer at the Ipswich and Suffolk presents for all the family.” accounts is over £64 million. Credit Union (ISCU) suggested to Margaret left a few pounds in her Same dividend Margaret that she put some money aside Christmas club account ready to start Hayley explains: “Members tell us for Christmas in the credit union’s Lock It saving again for next Christmas. She has they like receiving their Christmas Away Christmas Club. With a large family also been recommending the scheme to – Margaret has three children, nine Savings Club letter in November friends and family. grandchildren and six great- telling them how much they have “The whole credit union has been so grandchildren – paying for Christmas is saved throughout the year. We also helpful and it is such a good scheme I am always a struggle, so the savings club reward all our Christmas savers with telling everyone about it,” says Margaret. seemed like a great idea. the same dividend as our other ISCU started its Lock It Away Margaret joined the Christmas Club in savings accounts, which was 3.25% Christmas Club when Farepak collapsed January and put £3 each week into her in 2006. The success of the ISCU scheme, for 2009-2010 – a much needed account. At the beginning of November boost at a costly time of year.” and other similar Credit Union Christmas she drew the money out. Club schemes, shows that people like Nottingham Credit Union (NCU) has “Without the scheme, I’d have locking their Christmas savings away always had a Christmas Savings muddled through like before, but it was from the other pressures to spend account on which there is a restriction never easy,” explains Margaret. “The money all year round. that the money cannot be withdrawn Christmas Club has been a real help and until November. They have never has allowed me to save up enough to www.iscu.org.uk encountered any problem with the restriction on withdrawals, in fact there is research to show that people often prefer there to be a restriction to stop them from withdrawing the money. Kick the habit CEO Irene Smith says: “We have tried to encourage people making the transition from doorstep loans for Christmas to continue to pay the same amount as they did to the doorstep lender, with the balance going to savings. Not everyone wants to do this or keeps it up, but those who do have managed to kick the habit of borrowing in favour of saving for Christmas.” NCU has 200 members with Christmas Club accounts who had savings of about £19,000 in November 2010. A group of mums at a local school, for example, decided that they wanted to save specifically for Christmas and 10 of them saved £4,200 between them.

www.glasgowcu.com From left to right: Sue Raychaudri, ISCU Acting Manager, Margaret Holmes and her husband Keith, and Sally Chicken, ISCU Director. www.nottinghamcu.co.uk

Credit Union News / March 2011 7 FEATURE Saving mobilisation

SUPPORTERS OF Liverpool FC are saving for a stake in their football club with help from Partners Credit Union.

To become a reality, the supporter through Parliament means that they give local people the chance to do ownership campaign organised by will eventually be able to open up their bit.” Liverpool FC supporters’ organisation – membership to those who live or work Jay McKenna, spokesperson for Spirit Spirit of Shankly (SOS) – had to elsewhere. of Shankly, adds: "As supporters of address issues of affordability and Members can save as much or as Liverpool FC, we care passionately establishing a secure mechanism for little as they want in the share account about its future. Having gone through holding funds. and the money remains theirs up until turbulent times under owners whose interests did not match ours, the only way to truly safeguard the future of our football club is with supporter investment and ownership. “Working with Partners means all supporters, regardless of income, can save for a stake in their football club. They can have a voice and a say in how the club will be run, all by saving towards their share in our plans for supporter investment and ownership. “When the day comes when the keys to Anfield are handed over to us the supporters, then I am sure the initial work done by Spirit Of Shankly and Partners will be looked back on with a view that ‘that’s where it all started’.” Valuable role This initiative demonstrates the valuable role that credit unions can play in mobilising groups of people to save for a particular purpose. For SOS members, the money builds up in their Tracey Fletcher, Chief Executive account until of Partners Credit Union. they have saved Representatives of SOS contacted the point the up £500 for Partners Credit Union because it was a member signs their share like-minded ethical organisation which it over to buy a purchase and could offer a safe haven for supporters share in the until the day that to save for shares in the ownership supporter ownership the supporters’ put scheme. Partners was the ideal choice bid. Share withdrawals in their bid for as it is a local, community run are generally not ownership. business, and the range of other available on the account Everyone who raises services offered by the credit union because of the reasons it was set up, the £500 share is consulted on the was a bonus too. but one withdrawal per calendar year investment negotiations and the way is permitted to allow for member in which the club would be run once Take a stake emergencies. the investment is made. To take a stake in the share account, “The benefit of the credit union In addition to securing the funds for supporters must first join the credit share account is that anyone can get supporter ownership of Liverpool FC, union. The SOS share account is only involved in saving towards supporter Spirit of Shankly also works to available to members of Spirit of ownership of Liverpool FC, no matter develop the model of supporter Shankly and, at the moment, Partners how much they can afford,” says ownership and to represent over Credit Union can only accept Tracey Fletcher, Chief Executive of 50,000 Liverpool fans. membership from people who live or Partners Credit Union. “Partners was www.partnerscreditunion.co.uk work in Merseyside. However, the keen to help as we believe in the aims proposed new legislation going of the campaign and we wanted to www.spiritofshankly.co.uk

8 Credit Union News / March 2011 FEATURE

World Credit Union Conference comes to Glasgow by Michael Muckian

THIS YEAR, Scotland’s largest city will provide the perfect setting as host for World Council of Credit Unions’ 2011 World Credit Union Conference. The global credit union movement’s annual event will be held from 24 to 27 July at the Scottish Exhibition & Convention Centre on the banks of the River Clyde.

Glasgow’s current role as one of conference, co-sponsored by the Europe’s most forward-thinking Association of British Credit Unions – metropolitan centres, coupled with the WOCCU’s member organisation in the city’s rich history as part of the United UK – will follow four distinct tracks Kingdom, mirrors the historic strength that focus on raising standards in both and progressive strategies that have leadership and operational issues, as come to define the global credit union well as offering strategies for newly movement. As many as 2,000 developing credit union movements professionals and volunteers from up and ways to turn credit unions’ to 50 countries are expected to take philosophical characteristics into sound part in this year’s gathering of the operational strategies. Credit union credit union “clan” to share ideas and movements worldwide have faced strategies among themselves while unique challenges during the past two rubbing shoulders with native years’ global financial crisis. Strategies Glaswegians. and solutions to those challenges will become the topic of many sessions, as “Individual” well as the multiple networking Glasgow has been described as opportunities available to attendees. “unshakably individual”, with a unique In addition to conference activities, blend of character and nuance that the Global Womens’ Leadership sets it apart from Edinburgh and other Network will convene its annual forum Scottish cities. Glasgow blends the and hold its second annual golf historic with the modern, and exhibits tournament fundraiser at the a predisposition for the arts, shopping picturesque Carrick Course at the and fine dining second only to London Cameron House Resort. For more within the UK’s borders. information and to register for either There also will be a special Michael Muckian is The agenda for this year’s event, go to: www.cuwomen.org. invitation-only reception for WOCCU editor of Credit Supporters at the Kelvingrove Art Union World and WOCCU’s senior Gallery and Museum. For more manager of information on becoming a WOCCU communications. Supporter, visit: Contact him at www.woccu.org/involved/supporters. [email protected]. The conference also will offer city tours of Glasgow and Edinburgh for companions and spouses, as well trips outside the city limits to picturesque areas that were important to Scotland’s history. For more Copyright 2011 by information and to register for the World Council of conference visit: Credit Unions. Reprinted by www.woccu.org/events/wcuc permission.

Credit Union News / March 2011 9 FEATURE Covering the capital with

PETER BUSSY has worked with credit unions in London since 1979, helping to develop and support the sector. Ahead of his retirement next year, Peter looks back on the work he has done for ABCUL and the expansion of credit unions in the capital over the last 30 years.

“Originally I had an adult education remain small. They were generally Peter showing off his new role, working with people in their neighbourhood, ethnic or faith based. Credit Union Current homes who were involved with credit “We inherited a number of mainly Account card in 2009. unions – teaching them book-keeping Afro-Caribbean credit unions, for and the basics of running a business,” example, which were set up as self-help explains Peter. organisations – for the first ten years we “The credit unions at that time were were largely supporting them, sitting based around an anti-poverty social round dining room tables.” model which, by definition, had to However, the publication of a report in 1998 by Paul Jones at Liverpool John Moores University on sustainable credit unions was a watershed for the About Peter Bussy sector. The study provided the basis for a more professional credit union PETER BUSSY was ABCUL’s Business business model, introducing ideas from Development Manager for London and the employee credit unions such as payroll South East and more recently Training & deduction, for example. Development Manager. He has over 30 Peter says: “Paul Jones’s report laid years’ experience of developing successful the ground for credit unions to credit unions in communities and in the become more successful and to workplace. expand, and it meant we had a much Peter originally trained as a teacher and was very more robust business model to sell – heavily involved in setting up Camberwell Credit Union mainly to local authorities. (which became part of Southwark CU, now London “Now we could convince people that Mutual Credit Union). His involvement in this community credit unions had credibility, that they was set up shortly after. Peter set about credit union gave him first-hand experience of the weren’t ‘Toy Town’ banks, but were very working with local authorities to develop realities of volunteering. serious in helping employees manage the sector further, but as he explains, it He has produced, or assisted with, training materials their money and in reducing poverty and wasn’t just a question of ABCUL covering nearly every aspect of credit union operations. deprivation in communities. This was an approaching councils. He managed the production of the first “Credit Union offering that made sense to local “They approached us as there was Book-keeping” manual in 1986, and its revision in 1999. councils and tied in with the funding funding available – such as the Single More recently he worked with the Institute of Financial packages available at the time.” Regeneration Budget and the New Deal Services as part of the DELTA project on the accredited In those days, only Southwark Credit for Communities – funding for credit Award in Credit Union Practice for credit union staff. Peter Union (now London Mutual) existed for unions which councils could tap into.” also co-ordinates ABCUL’s consultancy services. council employees, and Tower Hamlets (now London Community Credit Union) Implementation Once the decision to set up a credit union had been made, the next step was implementation. “Our work usually started with a feasibility study, which included a detailed action plan about how a credit union could be formed,” says Peter. “This often became the organisation plan for the credit union.” Credit unions such as Lewisham, Islington, Hackney, Havering, Lambeth, Camden, Hammersmith & Fulham and Newham, as well as various credit unions in Greenwich, were soon springing up. As the number of credit unions began to increase, Peter and his team produced a map showing the expansion of credit union coverage across London (see the latest version opposite). The map was regularly updated as the situation Peter Bussy (far left) about the time he started at ABCUL in 1979. continued to develop and by the time

10 Credit Union News / March 2011 FEATURE credit unions

the ABCUL “London Plan” finished in bid on the basis of funding to 2008, there was credit union coverage in promote social enterprises sixteen of the boroughs of London – and instead and the money went to expansion continues to this day. Social Enterprise London.” The London project was funded by the Summing up the Association of London Government achievements of the project, (ALG) which represents the 33 London Peter says you just need to boroughs, as Peter explains. look at the map to measure “We made funding applications to the the success and to see how ALG every year and the funding paid for much of London has been me, as business development manager, covered by credit unions. and two part time training and Another important outcome is that credit union London borough coverage – January 2011 Continued expansion development in London has taken on a The boroughs in green are already covered by credit unions, across London boroughs life of its own, with strategic mergers, the boroughs in yellow are not yet covered and the Recently completed extensions common bond extensions and other boroughs in blue are under application for extension and initiatives now regularly taking place. should be covered very soon. I Ealing Credit Union to Brent “We have taken credit unions to all I M4Money (Hillingdon) to Harrow. corners of London and that’s a great unions – there is a lovely credit union Extensions currently feeling,” says Peter. in Greenwich where I live, and I would underway Of course, Peter’s involvement with like to give them first refusal, even I credit union is not going to end when though I’m a member of London (Hounslow) to Richmond he retires. Mutual CU, and the team there has “I will still be involved with credit achieved great things.” I Croydon Savers has extended to Sutton and Merton and they are talking to Kingston as well London Mutual and London Community Credit Unions I Islington Credit Union is preparing its case for extension to Haringey I Liberty Credit Union (Havering) is applying for extension to Barking and Dagenham.

development officers. My focus was on the development of new credit unions and working with councils to set up credit unions. The two officers worked with existing credit unions.” Peter says that the project played a very important part in the development of credit unions in the Opening of new Brixton branch of London Mutual Credit Union. capital, especially as it could offer TWO OF the longest standing boroughwide community credit unions in London ongoing service and support. are among those going from strength to strength. London Mutual (formerly “My colleague Kathleen Egan, for Southwark Credit Union) and London Community (formerly Tower Hamlets example, played a huge role as she Credit Union) have recently rebranded and now cover more than one borough. understood the corridors of power at councils, having worked for one, and she London Mutual covers Southwark and Lambeth Councillor Sally Prentice, Lambeth Council also understood fundraising and credit and is looking to extend into Westminster at some cabinet member for regeneration, planning and unions. As a team I think we all achieved point in the future. London Community covers employment, added: “As a financial co-operative, a great deal.” both Tower Hamlets and Hackney. Both credit members of the London Mutual Credit Union have In 2008 the project came to an end. unions have been very successful and have taken a say in how the organisation is run and can be There was a change of government in advantage of initiatives such as the Growth Fund confident that their interests are being looked and the Credit Union Current Account, and have after. This co-operative approach is one which as a London and a shift in power to a been very proactive about their development. council we are seeking to establish and we’re majority of Conservative councils at the Most recently, London Mutual opened a new proud to work closely with the credit union to Association of Local Government. branch in the heart of Brixton. make financial services more accessible to “The Association had control over the Treasurer Roy McLeod said: “The new branch has residents.” £28 million grant fund and was been made possible through funding from responsible for distributing the money,” www.creditunion.co.uk Lambeth First, the Borough’s local strategic says Peter. “The funding criteria changed www.thccu.co.uk partnership, and Lambeth Council who have and there was no longer any mention of supported the expansion of its services.” addressing financial inclusion. We had to

Credit Union News / March 2011 11 NEWS Growth Fund helps thousands of credit union members THE LATEST round of a Government fund designed to increase access to affordable credit for poorer consumers is due to finish at the end of March. Over 120 credit unions have worked with the Department for Work and Pensions (DWP) Growth Fund, to provide hundreds of thousands of consumers with access to affordable loans, as well as savings and bank accounts. The Growth Fund was announced by Chancellor Gordon Brown in 2004 to help promote financial inclusion by increasing the availability of affordable personal loans via third sector lenders such as credit unions and community development finance New websites go live institutions. Since the scheme began in July 2006, over 370,000 loans had been approved by the end of December 2010 to a total value of for credit unions over £160 million. The average loan value was £434 OUR NEW website www.findyourcreditunion.co.uk got off to and it is estimated that around 68% a flying start after it was launched in October. of customers who took out a Growth Fund loan also opened a bank or The site received almost 14,500 Visitors to the new website can savings account at the same time. unique visitors in December alone and search for a credit union using their Consumers taking out Growth Fund this reached a peak when postcode, their employer’s name or loans could have paid ten times or www.moneysavingexpert.com – the details of any associations they belong more interest had they borrowed website of personal finance guru to – such as trade unions or religious from a home credit provider instead. Martin Lewis – publicised the site in its groups. Mark Lyonette says: “The end of the weekly email on 15 December. Their The new ABCUL website – Growth Fund does not mean the end email newsletter goes out to over 5.5 www.abcul.coop – also saw a boost in of credit unions lending affordably, million people and, in all, 2,700 people visitor numbers, with unique visits in and many will gain capital which they visited the site though a link from this December up to more than 6,000. On can continue to use in their website in December. On 27 the new members’ section of the site communities. November, the launch was also there are over 70 information guides “However, the end of the revenue featured in The Mirror, the national for members, along with information funding for credit unions to make newspaper with a circulation of on policy, democracy, affinity schemes these loans may mean that some are 1.2 million. and projects. The members’ forum is unable to continue to lend at the December as a whole saw 17,368 used by ABCUL staff to answer queries levels they have been doing and it visits to the new site, which worked from members and to keep them up to remains to be seen how lending out as an average of 560 visits per day. date with news and developments. figures will change. Support for credit Speaking at the launch Mark By the end of December, 415 people unions is still needed in the short to Lyonette said: “Now, for the first time, were registered on the ABCUL medium term to help them to reach a all of the 450 plus credit unions in members’ section of the site and scale which will mean that they can Britain can add their details to one 56 credit unions were updating their maintain and expand this level of website, making it easier for people to own details. small, short term loans to lower find a credit union – wherever they www.findyourcreditunion.co.uk income consumers.” live or work.”

12 Credit Union News / March 2011 NEWS Prime Minister backs credit unions FOR TWO consecutive weeks in January, David Cameron took the opportunity to set out the Government’s support for credit unions at Prime Minister’s Questions, the weekly set piece event in the House of Commons. On 19 January, responding to a question from Tom asking for support for her motion to cap the cost of credit Blenkinsop, Labour MP for Middlesbrough South and East for poorer consumers, the Prime Minister again mentioned Cleveland, about the Government’s policy on illegal money credit unions in his answer: lending, David Cameron said: “I think there is unity across “...On the issue of controlling loan sharks, one part the House that we should try to encourage credit unions should be encouraging credit unions. There is all-party and try to get people out of the hands of loan sharks. That is support for that.” our policy and that is what we want to do [...].” As far as we know, this is the first time credit unions have A week later on 26 January, in answer to a question from been mentioned in Prime Minister’s Questions for two Dr Stella Creasy, Labour/Co-operative MP for Walthamstow, weeks in a row. Response to new IFRS Accounting Standards

AT THE ABCUL Autumn Conference in November, Helen Poole from the Accounting Standards Board (ASB) and John Smuland of Princecroft Willis LLP accountants were in attendance to outline the current situation regarding International Financial Reporting Standards (IFRS) and how their roll-out in the UK is likely to affect credit unions.

IFRS are a set of accounting principles that all credit unions would be covered by professionals have told us that they feel which have been developed internationally the same accounting standards as those IFRS will make credit union accounts less to harmonise accounting in the global applied by high street banks and major accessible to members, and besides, the FSA economy. As a result of a process of bringing international corporations. obtain their own financial information via together a wide variety of practices from ABCUL argued in response to the their return system so would not benefit around the world, much of the resulting original proposals that small credit unions from the changes either. We are continuing standard is far removed from the current should not have to apply this level of to engage with the ASB and do our best to UK Generally Accepted Accounting Practices financial reporting, which extensive research influence their thoughts as the policy (UK GAAP). showed us would provide little or no benefit making process continues.” The ASB has developed a three tier whilst creating massive extra costs. ASB Training approach to applying IFRS in the UK: accepted this and has altered its proposals so that those credit unions with total assets John Smuland adds: “When you read I Tier One is based on EU-adopted IFRS, less than £3.26 million may now, if they through a set of credit union accounts under which is the full standard suitable for very wish, apply FRSSME. IFRS, like Judy Garland, you may say ‘I don't large corporations in public ownership, think we’re in Kansas any more!’. Either operating on a cross-border basis and Increases version of IFRS will mean additional dealing in sophisticated investment Whilst the vast majority of credit unions software, training and time for the annual vehicles such as derivatives may now apply the less-onerous FRSSME accounts. Whilst the quality of the accounts I Tier Two (or FRSSME – Financial Reporting regime, the largest will still need to apply are enhanced under IFRS, the ordinary credit Standard for Small and Medium the Tier One regime which is likely to raise union members will not understand how to Enterprises) is based on IFRS for SMEs and accounting, auditing and other associated interpret the many extra pages and probably contains a tenth of the detail of Tier One, costs very significantly. ABCUL estimates won’t even begin to look at them. Board making it much simpler to apply potential increases in audit costs of around members will need training to understand 250 to 300% in the transitional year and what they are signing. I also have concerns I Tier Three (the FRSSE – Financial 100% thereafter. For general costs to the that the FSA did not comprehend similar Reporting Standard for Small Enterprises) credit union it estimates an increase of accounting disclosures from the big banks. is for the very smallest companies. potentially 5 to 10%. So more time and costs for everyone Originally, the ASB proposed to apply Tier ABCUL’s Mark Lyonette says: “These are concerned but a commensurate benefit may One to all those firms in public ownership – very significant costs considering we do not not be realised." i.e. plcs – and those which accept deposits, anticipate any material benefits from the regardless of size. This would have meant changes. Indeed numerous accounting

Credit Union News / March 2011 13 CUNA MUTUAL GROUP COMMENT Announcing the launch of

A RECENT study by YouGov reveals that an overwhelming 82%* of GB consumers have made no provision for their funeral costs. In plain terms, this equates to 40 million Brits who would leave their families with an average £3,000 immediate bill for the cost of their funeral. Nearly half of those consumers FuneralProtect+ protection for the policy holder and questioned (45%) stated that they are Launch Event their family, at an affordable price. concerned about their own funerals, On 14 September 2010 CUNA I Affordable premiums from only £2 with their main worry being cost Mutual, in association with The per month, per person (18%). The research also indentified a Co-operative Funeralcare, officially I growing trend for people to launched FuneralProtect+. The launch Available for anyone up to the age personalise their funerals. event, took place at Tatton Park, of 70, with no lower age limit Therefore CUNA Mutual, in Knutsford, near Manchester. Thank you I Suitable for you and your family association with The Co-operative to all those who attended the launch I There is a choice of fixed benefit Funeralcare, have launched event, your continued support is very levels - £2000, £3000, £4000 and FuneralProtect+ – a two in one funeral much appreciated. £6000, everyone included on the product designed to simplify the policy has the same level of cover funeral process by combining Key Benefits affordable insurance with expert of FuneralProtect+ I Under 18’s are covered for free funeral care. FuneralProtect+ is a life insurance I Guaranteed acceptance and there FuneralProtect+ is a unique policy that provides a fixed cash sum are no medical questions approach to funeral planning for those towards funeral costs arranged by The I who want to make regular, affordable Eligible for full benefits after only Co-operative Funeralcare. You can take six months. payments towards their family’s out the policy for yourself, or you can funeral costs and provides practical choose to cover you and your family. For further information please support and reassurance knowing the You simply pay an additional amount speak to your Sales and Support funeral will be arranged by the UK’s * YouGov, for each person you wish to include on Manager, or visit: September 2010 leading Funeral Director. the policy. FuneralProtect+ provides www.funeralprotectplus.co.uk

14 Credit Union News / March 2011 NEWS Action plan launched for credit unions in Wales THE WELSH Assembly Government has launched a three year action plan to support the development of credit unions in Wales.

The action plan, “Raising the Profile: campaign, the recruitment of members Meeting the Challenges”, aims to help from the public sector will be targeted. create a strong, sound and effective Credit unions participating in the year credit union movement in Wales and long campaign will be supported to identifies a number of key objectives to recruit public sector employees through enable credit unions to achieve long payroll deduction schemes. term sustainability. The Assembly Government will work These objectives include strengthening with credit unions throughout Wales and the governance of credit unions, raising ABCUL to explore the potential of the profile of the credit union movement developing a partnership agreement and achieving significant growth in credit between Welsh credit unions and Post union membership. To achieve the Office Ltd. It will also work with ABCUL objectives, 20 action points are set out in to ensure that Welsh credit unions are

the plan. able to offer the Credit Union Current Carl Sargeant AM, Social Justice For example, the Welsh Assembly Account to their members should they and Local Government Minister. Government says it will work with key wish to do so. stakeholders, including local authorities, Finally, to support credit union work in Assembly Government, credit union housing associations and private sector schools, the Assembly Government will membership has increased five fold from businesses, to develop a volunteer continue to fund schools initiatives and 10,000 in 2000 to more than 50,000 by recruitment programme with credit will work closely with ABCUL to share the end of 2009. unions and will work with ABCUL to examples of good practice in credit union “I am committed to helping credit explore the development of a volunteer and schools partnerships. unions in Wales secure long term hub for employers. It will also support Social Justice and Local Government sustainability. By 2013, I hope that many the provision of high level training for Minister Carl Sargeant said: “This action credit unions will have achieved, or be directors and managers of credit unions, plan demonstrates the Welsh Assembly very close to achieving self- to strengthen their roles in strategic Government’s continuing commitment sustainability.” leadership and good governance. to supporting credit unions. As part of an increased membership “With the support of the Welsh www.wales.gov.uk Highland welcome for growing credit union WESTERN ISLES Credit Union has extended its common bond to the Highlands and Islands of Scotland and has rebranded as Hi-Scot Credit Union. Hi-Scot Credit Union services as through 37 Highland Council are now available to all those Service Points. who live or work in the Manager of Hi Scot Credit Highlands and Islands of Union David Mackay said: “We Scotland – that’s over 285,000 got formal approval for the people across four local extension in November 2010, so authority areas. The expansion follows The Highland Council Resources it’s still early days, but our aim is to a study carried out by The Highland Committee, added: “I warmly recruit 10,000 members and become Council that identified the need for a welcome the availability of credit one of the top ten credit unions in credit union for the region. union services on a pan-Highland Britain.” Ian Morrison, Chair of Hi-Scot basis and look forward to the benefits The credit union is working closely Credit Union, said: “We are delighted that it will bring to the Highland with The Highland Council, Comhairle to be able to extend our coverage to population.” nan Eilean Siar and the Orkney the Highlands and Islands of Scotland. Hi-Scot Credit Union has its head Community Planning Partnership to This enables us to build on the office at Stornoway on the Isle of ensure that its services are widely successful growth of the credit union Lewis. Its services are available to taken up. in the Western Isles.” residents of the Highlands and Islands www.hi-scot.com Councillor Carolyn Wilson, Chair of both online and by telephone, as well

Credit Union News / March 2011 15 THE CO-OPERATIVE FINANCIAL SERVICES Credit Union Current Account goes from strength to strength

NORTH YORKSHIRE Credit Union has become the 26th credit union to launch the current account for its members.

Credit Union Since being launched in 2007 the actually seen consumers and than it was back in 2007. And Current Account scheme has made steady progress and businesses deserting the so called ‘big potentially even more so in the lower providers North Yorkshire follows some of UK’s banks’ to join it in an apparent ‘flight to income communities that credit unions largest credit unions that already trust’. generally serve. 1st Alliance participate such as London Traditional 1st Class Mutual, Bristol, United Savings & Loans and Clockwise. With consumer The product provides many of the Bristol When The Co-operative Bank services that customers can expect and ABCUL introduced the sentiment towards from a traditional current account. It Capital scheme just under four years ‘‘ offers members a debit card which can be used in shops and to Castle & Minster ago, little could both have known those apparently what turmoil the intervening withdraw money from cash Cornish years would serve. A banking responsible for the machines. Account holders can also Community crisis, the UK’s most severe set up standing orders and direct Banking financial turmoil at a recession in living memory, a debits, giving them much greater Clockwise global economic downturn and low ebb it would seem control over their finances. And there sovereign debt problems have is no overdraft facility, so account Glasgow made the financial world a the opportunity is holders cannot incur charges for going overdrawn. Hartlepool different place in that time. stronger now than it Whilst the accounts are run and Loss of faith Hull & East promoted by the individual credit Yorkshire These issues have propelled was back in 2007. unions, the behind the scenes IT and finance up the news agenda to administration is carried out by The just Credit the point that topics like banker New current accounts, customer Co-operative Bank. Leeds City bonuses and lending to small deposits and lending have all increased’’ This is part of the Bank’s businesses are now debated ‘down the at significant rates as a result of our commitment to tackle financial Lewisham+ pub’ and generally everyone has an financial strength and continued exclusion which has seen us support opinion. the credit union movement over many Llandudno commitment to go about business An understandable outcome of these responsibly. years, playing a vital role in helping the London issues has been a loss of faith in the And following the merger with growth and progress of credit unions Community banking industry. However, unlike many Britannia Building Society in 2009, the during the past decade. of our competitors, who needed Understandably, just like many London Mutual Bank is now well positioned to Government support or to tap continue to become a viable alternative consumers and business across the Manchester shareholders for extra capital in order for customers. country, credit unions are having to to survive, The Co-operative Bank has It would seem that the credit union ensure survival with the economic Newry movement would also have similar future remaining uncertain. And therefore may be reluctant to make the Norfolk opportunities. Recent figures from the Bank’s annual Ethical Consumerism investment in such new services until North Yorkshire Report show that the sector saw a the outlook improves. significant rise in deposits of a quarter Nottingham Recruit new members from £465m to £579m in the three ABCUL says the credit unions that Scotwest years from 2007. have signed up to the scheme so far So what part could the current have found it has enabled them to United Savings account play in this opportunity? & Loans recruit new members and strengthen When ABCUL and the Bank launched their relationship with existing the scheme in 2007 it was on the basis Voyager Alliance members. that the ability to offer a current We believe the scheme offers the White Rose account had been a gap in credit union potential to support the sustainable services compared with other financial foundations and continued growth in institutions. the movement and we would With consumer sentiment towards encourage members to speak to ABCUL those apparently responsible for the about what the account could offer. Barbara Hodgson, Regional Manager Charity & financial turmoil at a low ebb it would Social Banking. seem the opportunity is stronger now www.nycu.org.uk

16 Credit Union News / March 2011