Tag Archives: credit unions

Newcastle United Supporters Trust launch credit union ‘initiative’ | Supporters Direct

Through following the excellent Guardian columnist David Conn I recently noticed the following tweet:

Newcastle United Supporters Trust launch credit union ‘initiative’ | Supporters Direct.

It was a sad day when Newcastle United announced Wonga.com as its sponsor in 2012. Even more depressing was its inevitability. With the number of professional football clubs entering into sponsorship deals with online gambling companies reaching a saturation point and the financial services products offered by clubs themselves being described as “an own goal” and the subject of a government inquiry, it was only a matter of time until a club jumped into bed with the most wretched of extractive and callous financial services providers: the payday lender. That Newcastle United struck a deal with Wonga was sensible inasmuch as it is the daddy of payday lenders. But the deal attracted critical column inches by the volume, including this article by Conn himself; even for a club as used to ridicule as Newcastle United it seemed a spectacular own goal. With the English north east comprising some of the UK’s most deprived communities it served to make professional football seem even more out of touch with and remote from the communities it purports to serve.

It is therefore reassuring to see that in the absence of any ethical u-turn by the club it is the independent supporters trust that is providing a moral lead by establishing its own credit union initiative that has received impressive political backing and with a club as well-supported as Newcastle United offers credit unions in the north east the potential for establishing a critical mass of members that taps into the allegiance and partizanship of football fans.

Glasgow for many years was the only part of the UK where credit union membership came close to emulating that in the Republic of Ireland; as such it was the beacon of hope and the benchmark for the credit union movement across the UK. It was also held up as an example of how ethical lending and borrowing could be made available to people on low incomes, with poor or no credit ratings and be accessible at the neighbourhood level. However, another less-publicised implication of having a critical mass of members, and crucially, savings was that credit unions in Glasgow were able to offer social loans to and investment in the sort of community development activity that helps sustain communities and address inequality that blights too many of them. In this way the Glasgow credit union movement was cited in the excellent 2005 Review of Overindebtedness (mentioned in previous blogs of mine) conducted by Welsh Assembly Member Huw Lewis as a role model for credit unions in Wales, albeit over the long-term, in making social and ethical finance available to Welsh communities. In turn it would reduce the reliance on public sector finance for community development activities and propagate greater independence from government for the community development sector as a whole. In Wales, this remains some way off.

In Newcastle at least it is to be hoped that the new Newcastle United Supporters Trust credit union initiative can go some way to repairing the damage caused by the likes of Wonga and other payday lenders that extract so much money from less affluent communities. Wouldn’t it be nice to see junior Newcastle shirts sporting a logo related to this initiative given there will be space from the 2016-17 season with Wonga logos being removed?


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Our social responsibility to invest in credit unions?

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

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Community Development and Credit Unions – can you do the former without being a member of the latter?

2010 was the European Year of Combating Poverty and Social Exclusion (EY2010). The excellent Bevan Foundation facilitated the year in Wales including a flagship event in Newport/Casnewydd in the September of that year. I attended a Debt and Financial Inclusion workshop chaired by Fran Targett of Citizens Advice Bureaux. The thing that struck me, other than how dismal the Communities First attendance was at the event given the topic, was how so few hands were raised by attendees of the workshop in response to Fran’s question “How many of you are credit union members?”. Barely a third of attendees raised their hands, nearly all of whom worked in the third sector or had a remit in any sector to support vulnerable people. Several required the concept of a credit union to be explained.

It is an enduring mystery to me that people who have social justice beliefs, work in community development and who advocate on behalf of the marginalised, disenfranchised and vulnerable are not members of their local credit union. I make no apology for the moralising tone: joining a credit union is a simple yet profound action that helps affect change in a community, thereby embodying core community development principles.

“Credit Unions are financial co-operatives offering their members an easy and convenient place to save and access to low cost loans when required. They offer a valuable service to everyone – business people, families, employed or unemployed, young people or those who have retired. They encourage their members to make regular contributions into savings accounts which create a central pool of funds. This is used to provide loans back to the membership at very favourable rates. The interest generated from the loans is used to cover administrative costs, with any surplus returned to members as a dividend.”

Writing from a Welsh perspective, it is apt that the above definition of a credit union is sourced  from the Robert Owen Credit Union website, based in Newtown/Y Drenewydd. Owen was an eighteenth century industrialist and co-operativist who used his wealth, status and influence to pioneer radical social and employment reform. Neither might it be a coincidence that the city regarded as an exception to the general rule of low credit union penetration in the UK – Glasgow – was where Owen’s radicalism was enhanced during his time living in the city.

Figures released in the summer by the Financial Services Authority places credit union membership (including junior members) in the UK at 887,000, which is almost triple the figure in 2000 (325,000 members). However this equates to a measly 1.42% of the total UK population.

According to the Welsh Government membership of credit unions in Wales totals 55,000. This amounts to 1.83% of the total Welsh population, and though the rate of increase is less than the UK’s over a similar period it is still marked, with a 57% increase in membership between 2004 and 2012 (based on figures included in Huw Lewis AM’s thorough Review of Over-indebtedness, 2005).

By way of sobering comparison, over 70% of the Irish population is a member of a credit union. In the UK, only Glasgow achieves a membership rate even remotely comparable with Ireland: 22% of the city’s population at its peak (though this has dropped back of late).

Yet where penetration is so paltry, so it is that growth and opportunity is potentially enormous.  For community development workers the prospect of large pools of local finance that is owned and controlled by and accountable to local people should be mouth-watering…and not just for the potential source of funding, both grant and loan, in an era when the public and third sector purses are burdened by a greater call on their services at a time of brutal austerity.

By offering affordable credit, non-judgementally, to people who are otherwise driven to pernicious, informal or illegal providers is the embodiment of the social justice principles that are the bedrock of community development work. The Communities First programme in Wales has been a significant factor in the increase in Welsh credit union membership by helping (re-)establish, promote and staff, usually with volunteers, collection points. It has also been a source of in kind and small grant finance for the development work that would otherwise be beyond the capacity of credit unions’ volunteer boards. The EY2010 workshop experience would suggest, however, that irrespective of how important and productive this support has been, much of the community development workforce has not taken the step to join, or made the connection in joining, a credit union itself.

Self-determination and working together are also underlying values of community development, so the prospect of being part of a broad, member-owned collective with access to finance, but more importantly an ability to dictate how it is used ought to be powerfully alluring to community development workers. The recent banking crisis has taught us how passive and disenfranchised we, as savers, are with the traditional, so-called high street banking sector. Though it is hegemonic and propped up by a political establishment (which it, in return, helps to insulate from the more invidious effects of globalisation) what should be more appealing to the community development workforce than a good, old-fashioned David versus Goliath political scrap? Many a time I have sat in a room with communities and community development workers who bemoan the elevation of a financial bottom line or return over an alternative social or environmental one. This is not to say that a community-owned financial co-operative would establish a financial Utopia of fairness, equality and prosperity; it would remain under pressure from competing demands, political and interest group pressure and, no doubt, contrived obstacles designed to undermine its ability to compete with and challenge the established banking order (for instance, the ridiculous state aid wrangling in the early 2000s). It would however be more transparent and accountable, and though there remain things credit unions can do to improve the visibility to their memberships of their decision-making, we also know how capricious, reckless and arrogant banks have been with our money, yet substantive influence on this culture on the part of savers is extremely limited.

In conclusion, it is surely hard to argue that the credit union movement and a community development workforce faithful to its core and underlying values are not compatible and mutually reinforcible, so click here to find your local credit union in Wales. Go on….

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