Archive for the ‘credit unions’ Category
The consultancy.coop, a small Co-operative Development Body (CDB) based in south Wales has recently set up a new website aimed at helping new and growing co-ops with their Community Share Issues.
Alex Bird, one of the partners in the co-op, realised after working with a number of community co ops trying to finance projects through share issues, that whilst they could market themselves easily to local people, communicating to the wider public wasn’t easy on a small budget. He and his colleagues have worked with community shops, community centres, pubs, football and rugby clubs, festivals, food co ops, bike shops, off-road cycle centres, recycling projects, gyms and energy co ops, and all had difficulty marketing their share issues. Many didn’t proceed with a share issues because they couldn’t see how they would get sufficient share sales and the activists involved looked to other sources of finance such as grants and loans.
Some projects they’ve worked with have been very creative in their share issues, linking up with credit unions and CDFIs to enable people to get lines of credit or save up to buy shares, but they still find it difficult to contact their diaspora, and you can only raise so much from local people.
Many projects have a wider appeal than just their immediate neighbourhood, and there is a large body of people across the UK and further afield who don’t have a project nearby but would like to support one. Real ale pubs, vegetarian and vegan shops, football clubs, and of course ecological and green energy projects are examples of projects with a broader appeal, but many such projects weren’t getting through to their potential share buyers, and at times weren’t hitting their finance raising targets.
After many discussions about who wasn’t doing what and whose job it was to sort out this problem, and why “they” should be doing it, consultancy.coop did what co-operators always do in the end – got on with it themselves.
Using the well-known open source software from WordPress and with the help of Co-operatives UK Internet Services they have set up a .coop site from their own resources.
The new website is up and running at http://www.shares.coop and features all the Community Share Issues they know about free of charge in a classified style listing, plus lots of advice and guidance. The site is presently entirely self-funding, although as it develops they hope to bring some sponsorship on board in order to raise income and grow the site, so they offer paid for features as well as the basic free listing.
Help them improve their SEO and get up the Google ratings by visiting the site, telling your friends, blogging, tweeting and linking your website to theirs.
• Cost to you £0
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Today is Blue Monday, the so-called most depressing day of the year. The Wales Co-operative Centre launches a new Welsh Government funded website today designed to support people to manage their money more effectively. Wales Financial Inclusion Champion Katija Dew looks at some practical approaches we can take when we are suffering the post-Christmas financial blues.
When Dr Cliff Arnell of Cardiff University launched his ‘Blue Monday’ formula to predict the most depressing day of the year back in 2005, he managed to encapsulate what most of us already knew – that the post-Christmas, post-New Year lull can be the toughest part of the year. For those of us still finding it hard to manage our debts this feeling repeats until we are able to break that cycle.
Dr Arnell’s formula is complicated but common sense. It includes factors such as the weather, time since Christmas, our likely success (or otherwise) with our New Year resolutions, motivational levels, our need to have something to look forward to and, our levels of debt and our ability to manage or pay those debts.
It’s no coincidence that holiday companies promote their summer breaks from Boxing Day. The post-Christmas lull is the time when many people look to escape the drudgery of a new work year and the stress of mounting debt. With the amount of debt we carry as individuals throughout Britain, the post-Christmas lull for many people has transformed into New Year misery.
Christmas is a danger time for debt. High credit card bills for presents and even the Christmas day turkey and trimmings are often cited for increasing the burden. But, in this age of austerity many people with existing debts will have reduced their seasonal spending in an effort not to go further into the red. This may add to the feeling of helplessness. According to UK debt statistics from Credit Action, in November 2012 the level of outstanding personal debt in the UK stood at £1.42 trillion and the average household debt stood at £5194 per household.
To misquote New Order, if it ‘wasn’t for our misfortunes’ the first month or two of our year could be considerably brighter.
There are many excellent support services and charities in Wales that help people cope with debt. But, we know that there are people that are worried about their situation who don’t always find their way to the support that is available. The new website launched by the Local Government and Communities Minister, Carl Sargeant AM today will mean than more people can begin to manage their money better. Moneymadeclearwales.org offers impartial tips and advice on debt management and it signposts users to a range of specialised support services. The website also offers staff at those support services a forum for sharing best practice, materials and learning.
This Welsh Government funded website was created by the Wales Co-operative Centre in collaboration with support agencies who are experts in the field of money and debt advice. It is designed to be accessible and easy to use – even for people who are not confident with online resources. In fact, we were able to employ the expertise within the Welsh Government funded Communities 2.0
digital inclusion programme to ensure that the new website is accessible to users who are learning to use digital resources as well as those used to accessing information over the internet.
What practical measures can be taken now by people struggling to cope with debt? The first piece of advice is don’t panic. There is information and advice out there to help. The free and impartial services do not charge or judge. These resources are there to help. Secondly, be honest with yourself about your money. If you have cause for concern about managing the bills you have then look at the moneymadeclearWales website for initial guidance and follow the links to expert help. Next, join a Credit Union. They are financial co-operatives managed by the people who use them and offer an easy way to save, low interest loans and other benefits. Accounts can usually be opened for as little as £1. For many people this is the best pound they’ve ever put aside. Always try to avoid borrowing more. Instead, existing payments should be restructured so that they are affordable and advice is available to help with this. There is guidance on additional borrowing on the moneymadeclearWales website. Finally, avoid the fee charging debt management agencies advertised widely on TV and in the press. Paying their fees means less money to pay your bills.
We hope this new resource will help all of us who are working towards a financially healthier 2013 ensure that the fourth Monday of January next year is a happy Monday and not a blue one.
Project aims to safeguard rent payments for vulnerable tenants
On International Credit Union Day (Thursday 18th October), Katija Dew, Programme Director for Financial Inclusion at the Wales Co-operative Centre, and Welsh Government Financial Inclusion Champion for Wales, looks at the potential effect of Universal Credit on vulnerable tenants and how a new project could utilise credit unions to safeguard rent payments.
With just under a year to go before Universal Credit is introduced it is fitting to use International Credit Union Day to look at some of the effects that financial exclusion has on citizens in Wales. It is an opportunity to look at how schemes advocating responsible financial products can help safeguard tenants and vulnerable people in our society.
Universal Credit is due to start rolling out in October 2013 and it will have a huge impact on those claiming benefits. The new system will replace the majority of individual payments including tax credits, income support, jobseekers allowance, housing benefits, and some sickness or disability benefits. The approach is intended to simplify an existing system that most people agree is extremely complicated and its planned application raises issues around inclusion and vulnerability.
The payment will be made on a monthly basis to one person, irrespective of the number of people within the household that claim together. That recipient is then responsible for ensuring that the money paid for that month is used for family expenditure such as rent, fuel and heating, food and clothing.
Whilst this approach appears logical for the majority of households, there are a number of issues that could mean that benefits are not used to their best effect, so effectively reducing household income even further. ‘Financially excluded’ tenants, who may not be able to open a bank account or who may fear bank charges and manage by using cash find themselves paying more for day to day living. Those who don’t know how to manage their money well, or lack the financial education to prioritise debt effectively sometimes opt to use their benefits to pay debts on a perceived need basis – for instance paying off a short term loan as the company is literally on the doorstep. As an example of other difficulties people may face; those living in an abusive relationship or other dependency problems may find that the family does not see the money they are supposed to live on.
Beyond the change to the method of benefit payment, there are very significant changes to eligibility for benefits and the level at which they are paid. There are already an increasing number of households who find that their benefits will not cover their rent. This poses a real risk of homelessness and hardship. When Universal Credit is introduced most people who have their rent paid directly by benefits will have to manage the payments themselves. If the recipients have debts, problems with using bank accounts or don’t understand how to manage their money well, this means that the rent may not be paid.
At the Wales Co-operative Centre, we are working to support those most at risk of eviction and homelessness due to problems with managing their money.
Our Tackling Homelessness through Financial Inclusion (THFI) project seeks to support vulnerable tenants through the administration of their benefit through a ‘Credit Union Rent Account’. The project has been running across Wales since October 2011, and is funded by the Oak Foundation and Welsh Government. Its aim is to develop a credit union rent account model where none exists within a local authority, and to promote the scheme to private landlords and tenants to maximise take up.
The Credit Union Rent Account process is simple – the tenant joins a credit union and instructs the Local Authority to pay the benefit into a rent account. The benefit is ring-fenced and paid to the landlord (who pays a small administration fee to the Credit Union). This helps the tenant budget and by becoming a member of the Credit Union they get access to the other products a Credit Union can offer, such as low-cost loans and savings accounts. The tenant still retains control of their benefit. The landlord benefits from a degree of assurance that housing benefit is being used to pay rent.
Bristol Credit Union has provided a rent account scheme since 2008. Bristol Credit Union Chief Executive, James Berry comments, “Our members are fully in control of their account, and landlords like the fact that they are notified of any changes a member makes to the account, in advance to the change taking place. Tenants also particularly appreciate having rent ring-fenced in a jam-jar account as it means they have less of a worry about making sure the rent is paid.” Welsh Credit Unions are working hard to develop ideas further to suit their localised needs. For instance Neath Port Talbot Credit Union has provided a rent account model for over two years. By becoming a member of the Credit Union, over 76% of tenants on this scheme now have loans with Neath Port Talbot Credit Union where otherwise they may approached a high interest loan provider.
There are clear benefits to introducing vulnerable benefit claimants to a credit union now, prior to the introduction of Universal Credit. Credit unions are developing budgeting accounts, known as ‘jam jar’ accounts, to help support vulnerable people to budget for priority debt – ring-fencing priority payments such as rent. This will help vulnerable people, who will receive housing benefit within a larger single payment, to prioritise the rent going forward. Action now to support innovative models such as the credit union rent account will help mitigate against the impact of Welfare Benefit Reform, but this action is needed quickly so that people are prepared for the changes.
Vulnerable people need not be financially excluded in Wales. With co-operation and communication between accountable financial institutions, local government and other stakeholders we can ensure that our vulnerable and at risk citizens have the means to access responsible financial services and have the security of a home and food for their families.
Press release from the Money Advice Service:
46 new jobs created in South Wales; 90,000 call-centre contacts in 2012/13.
Today (30 April) the Money Advice Service, the UK’s free, independent and impartial source of money advice, announces the award of a three-year contract to Turn2us to provide its customer contact centre.
The Service currently receives an average of 7,000 calls per month and, from 1 July 2012 the handling of these contacts will be undertaken by Money Advice Line staff at Turn2us’ contact centre near Cardiff in South Wales, where 46 new jobs will be created by 2014. In addition, the team will also provide a new webchat service, adding to the number of ways people can access impartial advice.
Commenting on the signing of the contract, Karen Broughton, Marketing and Service Delivery Director for the Money Advice Service said:
“We are committed to offering a Service that’s free and accessible for everyone. Providing advice over the phone is an essential part of our Service, and Turn2us has a great track record of delivery in this field. I’m delighted to be working with them to reach many thousands of people who will benefit from our help to better manage their money.”
Alison Taylor, the Director of Turn2us said:
“The Money Advice Service is doing some great work, and being accessible over the phone with free and independent advice is fantastic. We are very pleased to be one of its frontline providers and look forward to helping thousands of its customers in the coming years.”
The contract was awarded following a competitive tender process and is worth £4m over three years.
Wales’ 22 credit unions have seen membership rates rise by 13% to 58,000, figures obtained by BBC Wales show. And despite the downturn in the economy the amount people are saving has risen £1.5m to £21m in 2011.
Over the year, £15m went out to customers in loans.
The Welsh government launched a £4m programme in 2010 to help credit unions increase support to “financially excluded” people.
It says they can help tackle the activities of illegal loan sharks, with safe and affordable alternatives.
The credit unions are spread throughout Wales. In north Wales, five of the six credit unions combined last year to form North Wales Credit Union.
It has seen lending increase by 20% over the last year to £2m among its 10,000 adult members. There are also 2,000 junior members.
Chair John Killion said despite a 12% rise in members, the not-for-profit organisation had also seen a rise in the number of bad debts, despite people’s best intentions.
‘Bucks the trend’
“People who have had loans and are very reliable have been made redundant and found it difficult,” he said.
Loans issued through credit unions are insured by the organisations. But the money they lend to borrowers is a proportion of the cash members have saved.
Mr Killion said, unlike banks, credit unions are not driven by profit and can also give financial assistance to people who would not normally receive support from high street lenders.
Bill Hudson, who manages the All Wales Credit Support Programme, said the rise in credit union members “bucks the trend” seen by other lenders.
The programme, supported by the Welsh government and the Welsh European Funding Office, gives business support to Wales’ credit unions.
Mr Hudson said the rise in members was partly due to their good terms and the fact that more people were becoming aware of credit unions.
And, at a time when high street banks are closing some branches, credit unions are available at the heart of communities with volunteers running services at local buildings such as community centres.
Mr Hudson said during the economic downturn attitudes to debt had changed among customers who are trying to be wiser with their money rather than having loans “left, right and centre” as they did three to four years ago.
“Now people are thinking debt is not healthy and they are trying to save a bit,” he said.
How credit unions work
- Credit unions are not for profit, owned by members with no external shareholders
- By law the amount of interest charged by a credit union can be no more than 2% a month – that’s an APR of 26.8%
- In reality, many credit unions offer loans of 1% a month, equivalent to 12.7% APR
- There are no set up fees or early redemption fees
- Some credit unions limit borrowing to a proportion or multiples of cash deposited by members
- Some credit unions operate more like banks, including offering current accounts
- Credit unions are regulated the same way as banks
Source: All Wales Credit Support Programme
Source: BBC News Wales
Minister for Local Government and Communities Carl Sargeant has welcomed a television advertising campaign aimed at making people more aware of what credit unions do and the help they can offer.
The advertisement has been commissioned by The Social Investment Business on behalf of Welsh Credit Unions and will hit our screens this week.
In order to highlight Credit Unions as an alternative to high cost providers the advertisement explains that Credit Unions do not charge arrangement fees, have no hidden costs and will charge no more than £68 interest on every £500 borrowed over a period of twelve months.
Scheduled during primetime slots on ITV daytime television the adverts will run for a four week period and will encourage people to telephone the credit union helpline or visit the website to find out more.
The launch of the advertising campaign comes in the same week that an independent evaluation of the Welsh Government’s Access to Financial Services Through Credit Unions Project is published.
Carl Sargeant said:
“Our programme for Government includes a commitment to deliver our Access to Financial Products through Credit Unions Project. The evaluation of phase one of this project considers how effective the project has been so far in supporting a well managed, sustainable movement that can deliver credible and professional financial products and services.
“I am pleased that the report has recommended that the Welsh Government and WEFO continue to fund the project. As well as meeting most of its phase one WEFO targets, the report found that phase two of the project is also on course to achieve its targets.
“I welcome the efforts being made by Credit Unions in Wales to raise the profile of the work they do to support people in communities around Wales. This advertising campaign is a further step forward in bringing to light the important work Credit Unions do.
“In the current economic climate and pressures on family budgets, it is important that people who consider taking out a payday or other loans from higher cost lenders know that more affordable alternatives are available.”
Source: Welsh Government
New powers for credit unions in England, Scotland and Wales will, from today, enable them to significantly expand the services they offer, and to compete directly with high street banks and other savings providers.
The changes, under a Legislative Reform Order (LRO), mean the financial co-operatives can now pay interest on savings for the first time and expand beyond their traditional customer base.
Credit unions are not-for-profit organisations owned by their members.
The reforms will allow them to provide services to community groups, businesses and social enterprises.
Robert Kelly, general manager of the NHS Credit Union for Scotland and the North of England, said: “The LRO is going to give us the opportunity to get closer to offering full services that are equitable and can compete with mainstream financial institutions like banks and building societies.
“It also gives us more potential for partnerships with a wide range of other organisations.”
The Association of British Credit Unions (Abcul) expects membership to increase as a result of the changes, which the UK government introduced as part of a commitment to promote mutuals.
There are currently about 420 credit unions across England, Scotland and Wales, with close to one million members.
The changes are designed to help individuals, businesses and other organisations access fair and affordable financial services in their communities. They will allow credit unions to provide a more effective alternative to high street banks on the one hand and high cost lenders and loan sharks on the other.
Common link restriction lifted
Until now, credit unions have been hampered by restrictions which meant all of their members had to have something in common – such as living in the same geographical area or working for the same employer.
Credit unions no longer need to prove that all the eligible members have something in common, which will mean that credit union services can be extended to new groups much more easily. For instance, a credit union providing services to anyone living or working in Pontefract will now be able to serve all the employees of a company too, even if they do not live or work in Pontefract.
Interest on savings, not dividends
Previously, credit unions could not pay interest on savings, only a retrospective dividend. Credit unions will now be able to begin to pay interest on savings, which will mean that people will be able to more easily compare the rates of return with other savings providers and it will help credit unions attract more savers.
Organisations can join a credit union
Under the old rules, only individuals were able to become members of credit unions. The new rules mean that organisations themselves can join a credit union (up to a maximum of 10% of the members) and use the financial services it provides. A community group, housing association or local employer, for example, may now be able to use a credit union to manage its money, with the added advantage that the money is kept in the community.
Credit unions can now compete with banks
Mark Lyonette, chief executive of the Association of British Credit Unions (Abcul), said: “These changes are a major breakthrough in the delivery of credit union services to communities around Britain. The new rules mean credit unions can now compete more effectively with banks and other lenders to provide fair and affordable financial services. Credit unions will be able to reach many more people, helping them to develop a savings habit, which can only be good for communities.”
- Credit unions explained – the Which? guide to credit unions
- Government commits more money to credit unions – £73 million to fund the expansion of credit unions