WHQ focuses on examples of housing organisations that are looking beyond bricks and mortar and their immediate management role to address issues such as financial inclusion, dementia and sight loss, an ageing population and domestic abuse
Greg England calls on housing organisations to do much more to help the development of credit unions in Wales
THE INTRODUCTION OF welfare reform is an issue on the minds of most social landlords. There are difficult times ahead with the ‘bedroom tax’ starting to bite and ‘universal credit’ just around the corner. The sharp growth of payday lending suggests more and more people are being excluded from mainstream financial services and finding it harder to make ends meet.
The market of people requiring the kind of financial services delivered by credit unions is increasing rapidly. It’s safe to say that we haven’t even scratched the surface of need for affordable credit and savings products within our communities. We all understand the issues but what are the solutions?
Credit unions could hold the key to tackling many of the financial inclusion issues we are witnessing in Wales today – so could the housing sector do more to help? Simple answer, absolutely yes! Particularly when you consider the commercial and ethical sense it would make.
The housing sector has a longstanding relationship with the credit union movement in Wales. However, these relationships vary greatly. Where a real commitment has been made, the results speak for themselves. On the whole though, most relationships can probably be summed up as positive and supportive – but not really active and committed.
Today we are presented with a network of credit unions serving almost every community in Wales. Yes they vary in size but the potential to make significant impact is enormous. You only need to look across the Irish Sea for examples of what we could, and indeed should be developing here in Wales. Credit unions in Ireland have three million members, or three-quarters of the population, giving it the highest member penetration rate in Europe. See www.creditunion.ie for more information.
Credit unions must become part of the fabric of our communities in Wales if we are to address some of the most serious problems. Sometimes we forget that most credit unions have just a few members of paid staff delivering an extremely complex financial service. The majority of support is provided by volunteers. On occasion our expectations need to better acknowledge these limitations. What credit unions want is a partnering relationship, working together to find a solution to a particular problem, for example universal credit.
Lack of awareness of credit unions is one of the main factors holding back their growth. Only 13 per cent of people know about the services provided by credit unions, yet on learning about them 60 per cent of people say they would benefit from their services or that it is an institution they would like to support.
Sustainability is unlikely to be achieved in most credit unions purely by serving those people who are excluded from mainstream financial services – the risks are high and the returns fairly modest. They must attract more payroll deduction members through local employers and appeal to a broader cross-section of society – including those with money to invest and those who wish to borrow larger, longer term loans. The local, ethical focus of credit unions can make them an attractive investment and as they get stronger they will become more competitive.
If every one of us invested £10 each month into our local credit union the impact would be instant and significant. Not a gift – an investment that would receive a return as the credit union developed and grew. More importantly, this money could be lent at reasonable interest rates, to people who desperately need it.
Credit unions must no longer be seen as the ‘poor person’s’ bank if they are to thrive.
The impact being made by the credit union movement is wide reaching but poorly publicised. Traditionally as a sector, credit unions haven’t been proactive in shouting about all the good work being done and the results that they deliver. One example involves the ongoing partnership between Smart Money Cymru credit union and United Welsh (see case study box).
It really is time to support the credit union movement in a fully committed and positive way. They are working hard to meet the demands of our communities but they can’t do it alone. The RSL sector has so much knowledge and expertise to offer and a stronger credit union movement will benefit not only our tenants but also us as businesses.
Greg England is head of communications at United Welsh
Case study: Smart Money Cymru
UNITED WELSH HAS PROVIDED support to Smart Money Cymru credit union since 2007 in areas such as governance, marketing, HR, IT and training. As a result they have seen a steady rise in membership and an increased pattern of saving.
Smart Money Cymru has worked closely with United Welsh in identifying communities where its services may have the most impact. These could include areas of high rent arrears, estates geographically isolated from main stream financial services, or communities where door-step lending is higher than normal.
A recent report provided by Smart Money Cymru indicates that 16 per cent of United Welsh tenants living in Caerphilly and Blaenau Gwent are now active members of the credit union. Since 2009 Smart Money Cymru has delivered the following:
Loans approved: 3,400
Loans Value: £2,470,744
Average loan size: £726
Savings: £1,109,275
Satellite Service / Collection Points: 4 (across Caerphilly, Blaenau Gwent, Newport)
Total Membership: 3,600
Supporting Smart Money Cymru has provided United Welsh with a tangible way to engage tenants and encourage them to make safe and secure financial decisions. These decisions directly impact on their ability to manage their rent successfully.
Smart Money Cymru is now branded as a clear alternative to doorstep lenders, and as an option to save whilst supporting the wider community. This organisation is not just for the financially excluded but an option for those who wish to support their local community, or who are just simply looking for an alternative to the banks
It has an ambitious business plan and a willingness to work closer with the housing sector. It’s safe to say that there’s much more to do but the appetite to really make an impact is evident from the board of directors right through to the many volunteers who extend the service across South Wales.