case study 2 - credit union

 

Moneytree Credit Union - NW Leicestershire

Lots of us locally were worried about low incomes in the wake of the pit closures in NW Leicestershire. This had a devastating effect all through the area – on some estates there was 35% unemployment. We formed a steering group – local individuals, voluntary sector, adult education to see what could be done. One of us had been a member of a credit union outside the area, and we felt setting up a credit union would make a contribution to helping people manage their everyday finances.

The steering group worked intensively with the credit union development worker at Leicester and County CDA for about 18 months to establish the new venture. This meant committing ourselves to one night per fortnight. Credit unions as financial co-ops are regulated by government legislation so its important that all the volunteers who run the credit union are thoroughly trained in their responsibilities. The local Council of Voluntary service provided some resources – meeting rooms and training, and a "collection point" for the credit union. We also got a small development grant from the local district council.

It's now 7 years on and we have built up to over 300 members, with members funds(savings) standing at £47,000. We have made 300 low cost loans to members.

The credit union is run by around 25 volunteers. When we started the credit union was only able to cover the Coalville area, but with some recent lifting of restrictive rules we can now provide for residents and workers in the whole of the NW Leicestershire area, and we are having a marketing drive, with the help of a small grant from the County Council.

In fact the UK has the most restrictive credit unions laws in the world, so the "movement" is small here compared to countries such as the US and Irish Republic. Anyhow, the UK Government has taken a good deal of interest in credit unions, has done lots of consultation and we’re expecting a national report soon on how credit unions can expand into the provision of much wider financial services reaching all parts of the community.

We’ve recently formed a close relationship with a very successful credit union in the Republic of Ireland – they are sharing with us their experiences of growth, strategic planning and management development. This is typical of the credit union "movement" – sharing good practice.

The advantage of a credit union is its run for the benefit of members. As a mutual it means better off members deposits and loan interest builds up the assets of the co-operative which also helps those who are less well off. We can provide very small loans that the banks cant be bothered with, and we can advance larger loans at better value than the commercial sector, together with other benefits – free life and loan protection insurance. Credit unions also benefit the wider community as well - they keep money circulating in the community that would otherwise be "siphoned off" in interest payments on commercial loans. The future looks very bright for credit unions to play a much bigger role in the fincial services sector in the UK – and we will all benefit!

Steve Peace

Moneytree Credit Union Ltd