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CREDIT UNION NEWS
09 Oct 08 - ABCUL Fringe meeting round up
ABCUL made sure that politicians from all the main UK parties were aware of how credit unions and their members are being affected by the credit crunch in fringe meetings at recent party conferences.
Chief Executive Mark Lyonette told MPs and other delegates in Bournemouth, Manchester and Birmingham how credit unions are having to step in when banks suddenly withdraw credit facilities from long standing customers.
Delegates heard about one credit union member who was facing a reduced income as she had been recently widowed. She had recently taken out a joint bank loan with her husband to carry out some improvements to the house.
“Wanting to do the right thing,” Mark explained to delegates, “Mrs A contacted the bank immediately to explain the situation and ask if the payments could be renegotiated to allow her to afford to repay the loan. The bank refused. They went further than that; they threatened to instigate repossession proceedings if the loan wasn’t repaid immediately and in full. Yes, the loan was secured……It was secured against a house which was owned outright. And the loan amount? Just £7,000. “
“Thanks to the credit union providing an affordable loan and some assistance from her family, Mrs A didn’t lose her home in quick succession to losing her husband. But this could have so easily happened if she didn’t have somewhere she could turn to when the bank she had been with for most of her adult life let her down in her hour of need. “
Mark also warned delegates about the worrying trend of loan brokers charging individuals up to £50 to refer them to their local credit union;
“Our member credit unions are incensed that these companies are making money from people’s desperation for affordable credit. The fact that these companies are able to make
“Our member credit unions are incensed that these companies are making money from people’s desperation for affordable credit. The fact that these companies are able to make
The big news at the moment is the Legislative Reform Order wending its way through Parliament. It promises to enable credit unions to compete on a more even footing with the high street banks. The words that Patrick Collinson wrote in the Guardian late last year move to fulfillment.
Guardian Money predicts 'fairytale end' for Credit Unions Act
Patrick Collinson, writing in the November 1st, 2007 money section of the Guardian believes that British credit unions are set to lose what he calls their ‘Cinderella’ status thanks to the Governments intention to ease membership restrictions and it’s commitment to publish a consultation paper on legislative reform for the sector.
The measures, campaigned for by ABCUL, and announced by economic secretary Kitty Ussher during a visit to Manchester last week, would see credit unions moving away from what he calls “almost Victorian regulations reflecting their industrial heritage”
He argues that the current common bond system has drawbacks that only serve to exacerbate situations such as the closure of Streetcred in Rochdale:
“when a small building society fails, that industry is quite good at persuading another local society to absorb it and prevent any loss of confidence among savers and borrowers. But a credit union can't acquire another, as that would mean stepping beyond the terms of its "common bond".
The piece goes on to cite Scottish Police credit union as a ‘shining example’ of the value that credit unions offer:
“When I tested its loan deal, it came out better than Barclays' much-promoted Loan Star 6.8% offer”
Guardian Money predicts 'fairytale end' for Credit Unions Act
Patrick Collinson, writing in the November 1st, 2007 money section of the Guardian believes that British credit unions are set to lose what he calls their ‘Cinderella’ status thanks to the Governments intention to ease membership restrictions and it’s commitment to publish a consultation paper on legislative reform for the sector.
The measures, campaigned for by ABCUL, and announced by economic secretary Kitty Ussher during a visit to Manchester last week, would see credit unions moving away from what he calls “almost Victorian regulations reflecting their industrial heritage”
He argues that the current common bond system has drawbacks that only serve to exacerbate situations such as the closure of Streetcred in Rochdale:
“when a small building society fails, that industry is quite good at persuading another local society to absorb it and prevent any loss of confidence among savers and borrowers. But a credit union can't acquire another, as that would mean stepping beyond the terms of its "common bond".
The piece goes on to cite Scottish Police credit union as a ‘shining example’ of the value that credit unions offer:
“When I tested its loan deal, it came out better than Barclays' much-
01 Jul 08 - Launch of All Party Parliamentary Group on Credit Unions
A new All Party Parliamentary Group on Credit Unions held its first meeting on Monday 30 June and Kitty Ussher MP, Economic Secretary to the Treasury, spoke at a reception to mark the launch of the group.
“I believe that everyone should be able to get affordable credit, especially at a time when I know families are facing a tough time – and credit unions can help to make that happen,” said Kitty Ussher. “And as well as offering small, affordable loans, they also provide a trusted place for people to save in their local community. “I'm absolutely committed to supporting credit unions in doing all of this, which is why I'm so pleased that this new group has been set up.”
Kerry McCarthy, MP for Bristol East, will chair the new group. Kerry McCarthy said: "I am very pleased that we are launching this new All Party Group on Credit
Unions. Many MPs have very active credit unions in their constituencies, and appreciate the benefits they can bring to financially excluded communities. We now want to bring credit unions into the 21st century, with new legislation to match their new ambitions. The APPG will be a strong supporting voice for credit unions and for the people who rely on their services."
ABCUL – the Association of British Credit Unions – will provide the secretariat for the group.
“Government, banks and credit unions are working together to scale up the sector to allow more people to benefit from its services,” says Mark Lyonette, Chief Executive of ABCUL. “This new group will provide an important forum for MPs and peers to discuss the issues facing the credit union sector and how it can help more people access inclusive financial services.”
Kitty Ussher also outlined the changes to credit union and co-operative legislation that the Government is planning to make. For credit unions this includes: liberalising membership criteria and changing the 'common bond', so that they can provide their services to a wider range of people; making it possible for groups, rather than just individuals, to become members; and allowing credit unions to pay interest on members' deposits, provided certain conditions are met.
Kitty Ussher added: “Those changes will remove some of the outdated and unnecessary restrictions that are limiting credit unions from competing on a level playing field with their competitors, and that are preventing them from growing and developing as we'd all like them to.”
The reception was supported by The Co-operative Financial Services and hosted by Kerry McCarthy MP.
The reception was supported by The Co-
money in this way can only reinforce our message that we need to continue putting the tools in place to ensure that we grow a strong, sustainable and visible credit union movement.
“We need a network of strong credit unions which are able… and are seen to be able… to be a mainstream supplier of affordable and accessible financial services in communities and in your constituencies across Britain. And we need a joined up effort amongst all agencies to make sure that people are aware of credit union services and sources of free money advice and know how to access them.
“Because unless we can work together to achieve that, it is an unfortunate fact that there will always be someone profiting on the back of the misfortune of others.”
Speaking at the Labour Party Fringe meeting, Economic Secretary to the Treasury Kitty Ussher MP (pictured), who has now moved to a post at the Department of Work and Pensions said; "Now more than ever it is important that people have access to affordable lending which is why the government is doing everything it can to enable credit unions to realise their potential.
"Mark Hoban MP, speaking in Birmingham as the Conservative Shadow Treasury Minister said: “The credit crunch is changing the face of consumer credit with mainstream lenders being able to pick and chose their customers and more people finding it hard to pay their debts. People needing credit will turn to other types of lenders, such as home credit and credit unions. We need to make sure that consumers have the right protection and information so that they can make the right decision about how to meet their needs.”
"Mark Hoban MP, speaking in Birmingham as the Conservative Shadow Treasury Minister said: “The credit crunch is changing the face of consumer credit with mainstream lenders being able to pick and chose their customers and more people finding it hard to pay their debts. People needing credit will turn to other types of lenders, such as home credit and credit unions. We need to make sure that consumers have the right protection and information so that they can make the right decision about how to meet their needs.”
Chair of the Liberal Democrats Simon Hughes’ busy schedule in Bournemouth meant that he was unable to attend the meeting at the last minute but speaking in advance of the event he said: “The tighter national and personal finances become, the more important are credit unions and those organisations which relieve financial pressures without making profit or adding stress. I know from personal experience in my inner city constituency how valuable credit unions frequently are. Now is the time for increasing education to protect people from exploitation, humiliation and worse. Relationship breakdown, deteriorating health, illness and even self-harm can be the consequence if people do not receive the financial help and support they need.”