Credit Unions................

[Amethyst]

Scoobs - been reading your posts OTR. If you think theres more leaway in the Credit Unions idea than I am giving them credit for please can you do a thread on here to look into it. I know Joncris/Righty is pretty keen on them and with the quick read about yesterday they do appear to be expanding rapidly - although mainly in the poorer areas.

I agree that they are good in theory but I wouldnt have a clue how to access one and I'm sure many peeps are the same.

[scoobydoo]

Re: Test Case Balls

I wil check it out

[Amethyst]

Re: Test Case Balls

Thanks hunny. Appreciate it. I don't want to be poo poo'ing ideas when I really am not au fait with them.

[Tools]

Re: Test Case Balls

Some explanations here
Credit Unions - How Credit Unions Work - Credit Union Accounts - Credit Union Loans

[Froggy]

Re: Test Case Balls

Full list of credit unions
http://www.abcul.org/page/members.cfm

[scoobydoo]

Re: Test Case Balls

sorry have people staying for weekend so did not manage to get back on line


This is an opinion from another person - not my words


Most Credit Unions in the UK come under the umbrella organisation of ABCUL(Association of British Credit Unions)they have a very informative web site.Just type ABCUL into your browser.
Credit Unions are a Not for Profit Organisation which basically means that all the profits are put back into the fund or deployed amongst the members as dividends annually .Credit Unions are controlled by the FSA and have very strict guidelines on the amounts of cash reserves they carry in case of mass withdrawals.
The interest rate on loans is 12% apr or one percent per month.
The usual procedure for obtaining a loan is to open an account and save for a certain period usually decided by the management committee before a loan is granted, the amount loaned is usually set at a multiple of the amount in savings again decided by the management committee.
The management committee is elected by the members once a year at the AGM and any member can be nominated. It costs £1 to join.
A lot of Credit Unions are now issuing loans in special circumstances without collateral.
The clever thing about the repayments is that you agree when you take out the loan to pay a certain amount into your savings when you make a loan repayment.
To illustrate this, if you save an initial £50 the CU may lend you £100.The interest due in this would be £6.50 total over one year. So if you paid back £2.50 per week after a year you would have paid off your loan and have a balance of £73.50 in your savings. On a second loan most CU's offer a loan of three times your savings so you could borrow £220 and still have £74.5 in savings which helps the organisation to fund loans to other members and enables the lender to build capital as he repays the debt.
Life insurance is a part of the deal and generally pays out double the value of savings to the next of kin or authorised party as well as paying off his loan, this is a free service. The Credit Union is run by volunteers and it is not possible to be on the committee if you are a paid worker. Paid workers are usually only taken on by the larger Credit Unions where the amounts of Money involved require the specialised services not available in the voluntary sector, and yes these are usually funded by Grants from various sources.
I must admit to being a great fan of the Credit Union movement and i can say that very few things have given me as much pleasure as the time i was able to pay off a loan shark who was charging a whopping 430%apr on a loan for a member and set them on the road to controlling their finances.
The biggest Credit Unions in this country belong to the Police and Fire services who use their loans to buy their houses etc. And in Ireland the Credit Unions are huge and have many high street premises and many hundreds of thousands of members Issuing mortgages and provide all the services you would expect from your high street bank but withot lining the pockets of the directors.



Not sure if these figures are up todate but the principle is the same

[Amethyst]

Re: Test Case Balls

mmmmm must admit I like the sound of it. The accessability worrys me with regards to recommending them to people as a viable alternative to banks and post office accounts.

I obviously don't wasnt to go down the route of setting up our own lol cause that would be mental but a good look at some of the bigger more accessible CU's could be very interesting, and possibly open the doors to a lot of people to proper financial inclusion.

What happens if you miss a payment or are late paying, or if you just default on a loan you have had - do they have debt collectors, are problems reported to the CRA's, hows it tie in with the general banking industry as a whole ? That kind of thing would like to know. Also th eprotection re a CU going under, I believe savings are protected by the FSA up to what 35k ? need to check that out too. But still biggest issue for me is accessability.

[Amethyst]

From FSA site PDF guide

If you don’t make your repayments, credit unions can, if necessary, get back any money you owe them:
by using debt-collection agencies;
through the Department for Work
and Pensions (DWP) if you are
receiving State benefits; or
through the County Court if you
are employed.



If you decide to repay a credit union loan early, they will not charge you
a penalty.


What happens if a credit union goes bust?
Answer
If a credit union is unable, or likely to be unable, to repay its depositors,
you may be able to get compensation from the FSCS.
The maximum amount is £35,000
for each member. This limit is the same for depositors of banks and building societies.
There are a number of conditions and exclusions that apply to any compensation you might receive from the FSCS. The FSCS only covers credit unions in England, Scotland and Wales. Visit the FSCS website for further info – see Useful contacts.
For credit unions in Northern Ireland please contact the Companies Registry – see Useful contacts







ACE Credit Union Services
0191 244 4061
ACE Credit Union Services


Association of British Credit Unions Ltd (ABCUL)
0161 832 3694
ABCUL


Scottish League of Credit Unions
0141 774 5020
Scottish League of Credit Unions


UKCreditUnions Ltd (UKCU)
01706 215082
UKCU

actually I'll shift the CU stuff to a seperate thread.DONE

Will Pm Righty too as its kind of his area.

[Amethyst]

Re: Credit Unions................

Partners Credit Union

one of the bigger ones - Merseyside

good site

[Paule]

Re: Credit Unions................

How do I start a credit union?
Before you consider starting up a credit union you need to check if there is already a credit union covering any of your area or your surrounding area and see if they would be willing to extend their common bond.

If there are no other options then initially you need a group of at least 21 people who will be willing to undertake all the tasks involved in doing research and setting up a steering group. For further advice please see the Financial Services Authority's website which will give you all the requirements needed in starting a credit union including how to formally register your intentions - www.fsa.gov.uk/creditunions.

Please can you give me information on subordinated loans
A subordinated loan is money that has been lent to the credit union by an individual or corporate body to develop the capital requirements of the credit union with the agreement that if anything were to happen to the credit union and it failed in any way, then the loan would rank behind those of all unsubordinated creditors including the credit unions shareholders. (This means that they would be last in line for any payout)

Subordinated loans must be made so that they are not repayable until at least 5 years and 1 day from date of issue. The terms of the loan must be set out in a written agreement that provides for these conditions.

For further information see CRED 8.2.1(4) R.

What are the stages in the growth of a credit union? If a credit union becomes very large can it change its status and become a bank?
The basic answer is No - a credit union cannot become a bank no matter how large it gets. Credit Unions and banks are two totally seperate types of financial initiatives.

Credit Unions can be either a version 1 which offers mainly deposits and loans or Version 2 which can offer a wider range of financial services including insurances and mortgages.

Out of over 500 registered credit unions in the UK only approx 6 are version 2.

[Paule]

Re: Credit Unions................

UKCU

A National Trade Association for Credit Unions, Steering Groups and Credit Union Support Organisations


This is a bit of info on here, not read through it all yet though

[righty]

Re: Credit Unions................

Why all this discussion about how a CU is formed?

It takes 2-3 years to form one. My own thoughts are that sites like this should be used to promote existing Credit Unions thereby hitting the banks where it hurts & much earlier than waiting until another CU was formed

[Amethyst]

Re: Credit Unions................

I agree with you Righty. think the look at how they are formed helps look into the accessibility of them for the general public, and gives an idea of how they are set up and organised.

[righty]

Re: Credit Unions................

Yes Am

It's worth noting that whilst not all offer current accounts yet, many are now starting to setup the facility to do so & I also think the credit crunch should give them new impetus

Speaking to my local CU I understand it's a question of installing the hardware, software & training the staff before a CU can offer current accounts so it may take some time before ALL can offer the same services but that's no reason to not start promoting them now

[TANZARELLI]

Re: Credit Unions................

Here is a post I made on PAG:

What is a Credit Union?

A Credit Union is a form of cooperative society which offers somewhere its members can save and also apply for low cost loans with low rates not aimed at getting members deeper into unmanageable debt but to help its members to take greater control of their finances. It is a not-for-profit savings and loans co-operative owned and controlled by its members.

The credit union is directed and controlled by a volunteer Board of Directors. All officers of the credit union are members of the credit union, who are elected by the membership at the Annual General Meeting. All members of the credit union have one vote, regardless of how many shares they own. Credit unions are not a local or a new phenomenon.

Credit unions are active in over 80 countries, and over 100 million people internationally are members. The government and many other organisations see credit unions as a valuable tool in their mission to tackle financial exclusion. People who are concerned about the closure of bank branches and the demutualisation of building societies are also advocating the development of credit unions. Credit unions make sense for many reasons and they are tipped to be the next big thing in financial services.

Savings, Loans and Banking

A credit union is a financial co-operative, which is owned and controlled by its members. Members of a credit union save in a common fund. As well as being a good savings option, with successful credit unions paying an annual dividend of up to 8%, the money saved can be used to make low interest loans to other credit union members. Only people who come within the common bond of the credit union can join it and make use of its services. This can be a locality area or a common bond. Many Credit Unions now offer current accounts allowing as well as their normal loans & cash cards but also the facility to set up DD's to pay your bills thereby making them more competative with the banks.

For more information or to search for a local Credit Union see the Credit Union Search Link below.

It is a requirement to join as a member of a credit union and start to save a specified amount on either a weekly or monthly basis. Once you have joined you can start saving in a way that rewards both you (with an annual dividend, free life insurance and friendly service) and people in your community (our low cost loans can save the people of your community a huge amount in interest. Continued saving by members allows other members to be able to apply for loans with low interest rates. New members can usually apply for smaller loans often up to about £500 but they are required to continue to save for the duration of the loan as well as to make the required repayments on the loan. This enables the pool of saved money to be available to other members.


Borrowing from your credit union is great value.
Most credit unions loans will cost you no more than 1% a month on the reducing balance of the loan (an APR of 12.7%). What this means for example is that if you borrowed £1000 over 1 year, you would repay no more than £1067 in total. Many credit unions charge less, some may charge more but by law this cannot be more than 2% a month on the reducing balance (an APR of 26.8%). You can find out about what loans and interest rates are on offer at your local credit union by contacting them via the Credit Union Search section.
Credit union loans come with no hidden charges and no penalties for repaying the loan early. Life insurance is built in, at no cost to the borrower, so if you were to die before you had repaid the loan, insurance would repay the loan for you. Source: http://www.abcul.coop/page/about/borrowing.cfm


Useful Links

http://www.abcul.coop/page/members.cfm Credit Union Search

http://www.abcul.coop/page/index.cfm Association of British Credit Unions Ltd, the main trade association for credit unions

http://www.psi.org.uk/publications/publ ... tion_id=38 Policy Studies Institute

http://www.hm-treasury.gov.uk/consultat ... kforce.cfm HM Treasury - Credit Unions of the Future Taskforce Report