Credit Where Credit's Due- A New Golden Age for Credit Unions?
By Clare Owen, Director
19 September 2024
The credit union movement has a long history of success in the UK but, for many years, they have not broken through into mainstream consumer consciousness as they have in, for example, the United States or in Ireland. Why is that?
It is strange given the Bank of England register contains over 400 credit unions. Also, the Bank’s statistics department, at the end of July 2024, published quarterly statistics for the credit union sector showing a record increase in lending by 21%. Clearly it is a successful movement.
We believe there are two main reasons:
1. A mainstream consumer perception that only the socially disadvantaged and financially excluded turn to credit unions for help.
2. A perception that they are unsafe (as a small number of credit unions are regularly failing and that creates bad news publicity disproportionate to the effect of their closure).
Both of these are false perceptions and now is the time for the credit union movement to dispel these myths. With the arrival of the Labour Government there can be no better time to do that.
In their pre-election position paper Financing-Growth, Labour pledged to double the size of the mutual and co-operative sector and said:
“Labour will aim to double the size of the UK’s co-operative and mutual financial services sector. The structure of member-owned mutual organisations makes them more community oriented than other banking institutions”, and:
“Labour supported the reforms in the Financial Services and Markets Act (FSMA) 2023 which allow credit unions to offer more products, and a Labour government will build on this”
To grasp the opportunity of the moment we believe, from our work within credit unions, that a number of actions must be accelerated now:
– Strengthen internal strategic governance and consider (modestly) remunerating several integral board non -executives. This will bring deeper know how and reduce the high level of board turnover.
– Co-operate with other credit unions in the same region to conduct public awareness campaigns of what great value you bring to the communities.
– Identify what new products you can now offer (such as insurance) and partner with the right insurance distributors on a “white labelled basis”.
– Capitalise on the “regulatory clampdowns” applied, or to be applied, to Pay Day Lenders and Buy Now Pay Later Firms.
– Hold Labour to their pre-election promises through concerted PR and Trade Body lobbying.
If we can assist you in your thinking and delivery, to seize the opportunities available, please do contact me for a no cost initial discussion.