I have reblogged below another terrific blog from the Wales Co-operative Centre (by Katija Dew) about the merits of credit unions and, as the welfare state is hollowed out by the government, a sober and salient reminder that there might be increasingly fewer means for people in need to be supported and to be insulated from the pernicious effects of predatory loan providers, both formal and informal, unethical and illegal.
I recall almost 7-8 years ago working in a Communities First (CF) role with a small Valleys credit union to boost its membership and profile among residents and primary school pupils in a CF community and was surprised at the time at how candidly it spoke of the need to attract members and savings from, and develop a loan book among, “middle class folks” at the same time as broadening its ‘traditional’ membership in less affluent communities. I recognised the logic of this in financial and sustainability terms but it introduced a tension to the proposed project because it would have required working with better-off individuals for whom the benefit of joining the credit union might not be as immediate or as advantageous as it would for less well-off people; in essence, we would target individuals that were not a priority for the CF programme.
However, it is a race to the floor if credit unions seek to expand their membership among individuals with low or fluctuating and vulnerable incomes. It is an inconvenient truth but Katija Dew is wholly right to point out:
“Sending vulnerable, and frankly expensive to serve, customers to [credit unions] produces an imbalance in their membership”
Any attempt to expand credit union membership, on a local or national scale, needs to deliberately target middle and higher income individuals; and to do so does not mean principles of benevolence and social justice are abandoned. It makes long-term economic sense for the disadvantaged people we believe can benefit from the savings and loans services that credit unions provide.
If most people remain of the view that business and corporations ought to act in a responsible way with their profits, investments and operations, as Robert Cumming (2012) concludes* (even if Corporate Social Responsibility as a term is less prominent than a decade or more ago), then is there not a parallel with what we as individuals can do with our personal investments? Joining a credit union and contributing to the movement’s expansion is not only a financial investment but an ethical and social one. Indeed, should we be concerned at the way in which the state is retreating from its social contract allowing traditional means of financial assistance for low income individuals to be replaced by predatory lend-me-quick sources then surely we have little choice but to do so?
*Interestingly, Cumming cites Newtown/Y Drenewydd-born Robert Owen, widely considered as forefather of the credit union movement, as an example of British industrial pioneers with a conscience