1. The development of credit unions in Britain

2. Credit unions in Britain (England, Scotland and Wales)
Just under 360 credit unions
Majority live and work (community –”territorial”)
Also serve employee groups
Passenger Transport, the Co-operative and the Police
From 200 to over 35,000 members
No 1 Police Credit Union – 30,000 members; Manchester Credit Union – 20,000 members
Penetration of total population less than 2%.
Wide regional differences – Liverpool est 15%
Total: 1,100,000 members / 130,500 juniors
£1,32 billion in assets

3. Traditional model credit unions
First credit union in Britain in 1964
Serving immigrant communities
Small community operations
Entirely volunteer run
Social focus rather than business orientated
Not built for expansion and growth
Influence on industrial and employee sector
Impact in England and Wales – real but marginal - after 12 years growth
By 1998, average membership community credit union after was around 370 members
Average membership of an employee credit union was 1,552 members

4. Reasons for slow growth
Poor and inadequate legislation
Unsound business model in 1980s / 90s
Insufficiently attractive products and services
Divided trade associations
Largest is the Association of British Credit Unions Ltd – ABCUL
Also UK Credit Unions, ACE CU Services, Scottish League, Independent Credit Unions

5. Changing Credit Unions
Traditional model credit unions
Business-oriented credit unions
New Model Credit Unions (WOCCU)
Regulated Credit Unions (Financial Services Authority)
Quality Credit Unions – that can serve members with the products and services they want and need

6. 7 Doctrines of Success
Learning from the international credit union movement
Serve the financial needs of the wider population
Savings mobilisation
Product diversification
Operating efficiency
Financial discipline
Good governance and effective management
Assimilation or giving a financial service better than the mainstream
David Richardson, World Council of Credit Unions, 2000

7. Blueprint for Development
Will people invest and save with us?
Is what we offer attractive enough?
Are we good enough to make use of these powers?
Are we able to do what we need to do? 7

8. Scaling up credit unions
Enabling legislation and proportionate regulation
Sound governance and strong management
Sustainable business models, products and services
Appropriate investment

9. Legislation and regulation
Enabling legislation 2012
More flexible common bond (field of membership test)
Organisational and corporate membership
Once a member always a member
Interest not just dividends on savings deposits
Proportionate regulation 2012
Higher level of capital adequacy than basic solvency, of at least 3%
Additional provisioning for bad debt
FSA to act on credit unions who are out of compliance

10. Improving products and services
Increased range of savings products
Increased use of payroll deduction –saving while you earn
Christmas accounts, children’s accounts
Payment of dividend but also now interest on savings (some CUs)
Cash ISA (Tax free Individual Savings Account)
Multiple loan products at variable interest rates
Some credit unions now do mortgages (equity loans)
Insurance, including loan and savings insurance
Flexible payment options –
payroll deductions, state benefit receipt, PayPoint cards, cash collection
Credit union current account
Also pre-paid debit card, budgeting accounts
Financial education and access to money and debt advice
Greater use of online technology

11. Working in partnership
Employers
New legislation means employees can be added into new common bond
Payroll deduction
Housing providers
Employees and tenants of housing providers can now be added into common bonds
Budgeting accounts
Schools
Encouraging savings
Financial education
Local Authorities
Included in economic development strategies
Local authorities joining credit unions
UK and Devolved Government
Churches
The Church Credit Champions Network

12. British Credit Union Growth 2003-13

13. Government support
Credit unions seen as filling a gap in market for low and moderate income people
Regarded as contributing to civil society
Education of politicians by ABCUL and local credit unions
Financial Inclusion Growth Fund
£100 million into the sector for serving low-income families
405,134 loans to a total value of £175,351,444.
100 credit unions contracted to meet GF targets
Credit unions retained capital investment
Improved working practices by operating in a more business-like way. (Bristol University, 2011)

14. Impact of FI Agenda
From tackling poverty to promoting financial inclusion – change of emphasis
Focus away from solely the provision of loans
Widening access to credit union membership in low income communities
Some concerns:
Danger to long-term sustainability as co-operative and mutual financial institutions?
Impact on image of credit unions?
Concern about return of dependency?

15. Organisational challenges
Leadership, governance and management
Consistency in products and services
Serving wider target market
Developing information technology
Developing effective partnerships

16. Government support for transformation
Based on success of the FI Growth Fund
Credit Union Expansion Project (CUEP) (£35.6 million)
Project managed by Cornerstones and ABCUL – from 2013 to 2015 (extended to 2016)
About 30 credit unions in the project nationally
Voyager Alliance Credit Union

17. Credit Union Expansion Project objectives
A new banking platform
Online loan decisioning system – already in many credit unions
Online membership including Identification checks
Banking platform will support development of wider product range: including savings accounts and loans, current accounts, budget accounts,
Channel delivery will includes internet, mobile, telephone, ATM, and Branch

18. Governance research project
To set out the principles of a logical, consistent and integrated system of governance
Bespoke to the credit union sector
Clarifying the distinct nature of governance – not as a higher tier of management

19. Governance research papers
Strategic planning
Internal audit and the role of the supervisory committee
The role and responsibilities of a director
Director recruitment and selection
The role and responsibilities of the CEO
Oversight of risk and compliance
Accountability to the membership
Board-management relations
CEO recruitment, performance management and succession planning
Delegations and escalations of authority
The monitoring of performance on strategic objectives and effective use of management information
The monitoring of performance of the CEO
Board and director evaluation
The functioning of sub-committees
Board decision-making
The development of board policy

20. Capital Credit Union Ltd
Capital’s CE0 talks about combating extortionate lending

21. Finale
This is our credit union UK Largest credit union in Europe