Archdiocese of Southwark JPIC Spring Assembly Credit Unions Clive Lambie Director, Croydon Merton & Sutton Credit Union 1

What is a Credit Union?  A savings and loans co-operative  Member-led (no FAT cats)  A social enterprise  Demonstration of the Big Society (A bank but not a bank) 2

What is the purpose of Credit Unions?  Promoting wise money-management  Observing a ‘common bond’  Ethical lending  Keeping more money in the community  Addressing financial exclusion & the ‘unbanked’ 3

What do Credit Unions do?  Encourage people to get into the habit of saving  Encourage members to save regularly and borrow sensibly  Offer an affordable alternative to other high rate lenders  Move people from borrowing to saving  Help people to get out of debt  Help people to build up a savings balance that will give them a better option if they need to borrow in the future  Calculate loan interest on the reducing balance – makes loans more affordable 4

How do Credit Unions work? Shareholders/members Secure Savings (shares) Affordable Loans Surplus distributed as Dividend to members 5

How are Credit Unions run? Limited Companies Board of Directors (volunteers) Paid Staff Volunteers Supervisory Committee Auditors 6

Credit Unions Worldwide 49,330 credit unions in 97 countries 183,916,050 people as members The credit union movement grew quickly throughout America and Canada and soon began to have an influence on the rest of the world. Credit unions in Jamaica began during the 1940s. Father John P Sullivan, a Jesuit priest, believed credit unions could help working people cope better with wartime conditions In Ireland the first credit union was founded in 1958 In Ireland, over 70% of the population belong to a credit union. In America and Canada the figure is around 43%. Credit unions are also growing fast in Eastern Europe, parts of South America, Africa and the Far East. The World Council of Credit Unions represents the credit union movement globally. 7

Credit Unions in the UK –350 credit unions in the UK, over 800,000 members –More than £550m in savings, over £450m on loan –What are the Common Bonds? –What is the target membership? –What are their differences? –What ‘products’ do they offer? –How are they regulated? – FCA & PRA (ex-FSA) –Deposits are FSCS backed –ABCUL 8

Credit Unions in South London, Kent and Medway (1) Croydon Caribbean Credit Union:Croydon Caribbean Credit Union –For people who reside in the London Borough of Croydon or have an association with the Caribbean. Croydon Merton & Sutton Credit Union:Croydon Merton & Sutton Credit Union –For people residing in or employed in the London Boroughs of Croydon Sutton & Merton. Greenwich Credit Union:Greenwich Credit Union –Individuals living or working in the boroughs of Greenwich or Bexley. Hastings & Rother Credit Union:Hastings & Rother Credit Union –For people who reside in or are employed in Hastings Borough and/or Rother District. 9

Credit Unions in South London, Kent and Medway (2) Kent Savers Credit Union:Kent Savers Credit Union –People residing or employed in Kent (including Medway) and Bexley. Lewisham Employees Credit Union Lewisham Plus Credit Union –People residing or employed in the London boroughs of Bromley and Lewisham, and SE19. London Mutual Credit Union:London Mutual Credit Union –Open to people residing or employed in the London Boroughs of Southwark, Lambeth or Westminster. Wandsworth Community Credit Union:Wandsworth Community Credit Union –For people residing in or employed in the London Borough of Wandsworth. Wantsum Savers: The Isle of Thanet Credit Union:Wantsum Savers: The Isle of Thanet Credit Union –For people who reside in or are employed in the Isle on Thanet. 10

Other Credit Unions in the South-East (1) Aylesbury Credit Union Brent Shrine Credit Union Camden Plus Credit Union Community Saving and Loans Berkshire Credit UnionCommunity Saving and Loans Berkshire Credit Union Ealing Credit Union Family Assur Friendly Society Emp Credit UnionFamily Assur Friendly Society Emp Credit Union 11 Hillingdon Credit Union K & C Credit Union London Plus Credit UnionK & C Credit Union London Plus Credit Union London Community Credit Union LTD Credit Union M for Money Credit Union Milton Keynes Credit Union ‘Find Your Credit Union’:

Other Credit Unions in the South-East (2) National Federation of Retail Newsagents (NFRN) Credit UnionNational Federation of Retail Newsagents (NFRN) Credit Union National Fire Savers Credit Union Newcred Community Credit Union North London Credit Union North West London Credit Union Open University Employees Credit UnionOpen University Employees Credit Union Oxford Credit Union Credit Union PCS Credit Union Plane Saver Credit Union 12 Radio Taxicab (London) Credit Union Solent Credit Union Surreysave Credit Union Thamesbank Credit Union The Rainbow Credit Union Waltham Forest Community Credit UnionWaltham Forest Community Credit Union Waltham Forest Council Employees Credit UnionWaltham Forest Council Employees Credit Union

Challenges facing Credit Unions in the UK –Benefit changes: Universal Credit Benefit cap Bedroom tax –Bad Debt –Competition from ‘doorstep’ lenders –FCA/PRA regulatory regime –FSCS contributions 13

The Credit Union difference: loan interest on the reducing balance 14 Typical door-step lender (up to 4000% APR): Loan requested: £500 Charge for credit: £375 Total payable:£ £17.50 Typical CU loan (12.7% APR): Loan requested: £500 Interest charge: £30 Total payable: £ weeks interest charged on outstanding balance £345 in the member's pocket for their family

Regulatory regime – FCA & PRA FCA = Financial Conduct Authority PRA = Prudential Regulatory Authority (both Bank Of England) Limited Companies Both Deposit Takers and Lenders Approved persons regime Reporting requirements Financial requirements Governance requirements Regulatory powers 15

Questions (& Answers?) 16