ABCUL's blueprint for development has informed its work over the past ten years to build a sustainable and effective credit union sector, capable of meeting the financial needs of millions of people. This work has been based on 4 key areas and draws on experience and best practice from successful credit union movements around the world.
What credit unions need
1 - Enabling legislation and proportionate regula
- Legislative Reform Order has passed through Parliament and came into effect on 8 January 2012
- Co-operative and Community Benefit Societies and Credit Unions Act will allow credit union legislation to be more easily updated in the future
- Financial Services Authority (FSA) regulation has brought with it membership of the Financial Services Compensation Scheme
Now that the long-awaited enabling legislation has been passed, credit unions will be working with ABCUL and partner organisations to maximise its impact.
Under the FSA we have been successful in securing an appropriate and proportionate regime for the credit union sector and we seek to secure its future under the Government’s proposed, new regulatory structure.
2 - Sound governance and strong management
- Governing for success - a code of governance for credit unions was developed by ABCUL in partnership with credit unions and other stakeholders
- ABCUL provides a range of training for officers and staff in credit unions. Classroom, in-house and on-line training are available in a wide range of subjects
Increased corporate volunteering to bring new skills into credit unions - an online volunteer hub would allow credit unions and potential volunteers to match skills and opportunities.
3 - Suitable business models, products and services.
Credit unions need to offer the services that people need if they are to continue growing. This is why ABCUL has worked together with its members to develop the Credit Union Current Account and the Credit Union Prepaid Card.
The major missing ingredient which would see credit unions grow to play the significant role that they do in many parts of the world is the introduction of 'back office' integration. Elsewhere in the world it has been shown that if credit unions work together on a central basis it has a dramatic impact on their scale.
For example if a number of credit unions in Britain shared one banking platform it would enable them to offer shared branching through the post office network and each other's branches. It would also allow for a telephone helpline giving credit unions much longer opening hours and easy internet access to accounts for those who were able to use this.
This has been recognised by both the former and current Governments.
The Department for Work & Pensions has recently announced an investment of up to £38 million in a Credit Union Expansion Project. This could help the sector continue its collaborative work and allow a link up with the Post office network and greatly increase access to credit union services.
More information on this is available here.
4 - Appropriate Investment
Over 100 credit unions were involved in making affordable, responsible credit more easily available by making small, short term loans through the Department for Work and Pensions administered Growth Fund. To March 2011, 405,000 Growth Fund loans were approved and payment made to a total value of over £175 million. An independent evaluation of the scheme found that loan recipients saved between £119 million and £135 million compared with the same amount loaned by high-cost alternatives.
Investment in a back office for credit unions will bring the benefits outlined above, allow a tie in with the Post Office network and has the potential to bring inclusive financial services and affordable credit to millions more people.