What are credit unions?
Credit unions are an ethical and customer-centered locally based fair alternative to the legal and illegal loan sharks.
They are local membership not-for-profit co-operatives/mutual societies that offer ethical, affordable loans and mutual and ethical savings accounts at rates that are competitive with high street banks and building societies. All the people who have savings or loans are the members of their credit unions from whom the management board is elected by the membership.
Each credit union’s members must have a ‘common bond’, that is, live in the local area covered by the credit union or have a common affiliation; for example through employment. Importantly, time is spent with people who want loans in order to agree realistic and affordable repayment schedules.
Governed by the Co-operative and Community Benefit Societies Act (2014), credit unions are given permission to operate by registration and are regulated by the Bank of England’s Financial Conduct Authority (FCA), which guarantees Credit Unions’ deposits, and the Bank of England’s Prudential Regulation Authority (PRA) to which credit unions must submit annual financial accounts. All money saved in a credit union is protected by the Financial Services Compensation Scheme, up to £75,000.
The first credit union in Britain began trading in 1964, and over the last 50 years credit unions have grown to provide loans and savings to more than 1.2 million people across England, Scotland and Wales. Credit unions have a proven track record across the world. In fact, 217 million people are credit union members in 105 different countries.
Within the strict rules and regulations governing how credit unions are governed and operate, individual credit unions are diverse in shape and size, how they operate on the ground, whether they cover rural or urban areas, the levels of local unemployment and poverty and the scope and range of services they provide. A few (usually larger ones) offer extra services such as online express loan facilities, cash-based Child Trust accounts, ISA’s, funeral plans, savings and loan repayments via payroll, current accounts (features may vary), budgeting and debt management.
Each credit union usually began as the idea of a group of committed local individuals, often with the help of their local authority. Through mergers and opening more branches, some credit unions have grown to cover a large area.
All credit unions are run by paid employees and nearly all are supported by volunteers in many and varied capacities; as a customer services person in a branch, in administration, marketing and serving as a director. It is therefore difficult to generalise on the type and level of support and assistance that each credit union requires.
North Wales Credit Union Group