The credit union industry’s trade body has rolled out an ambitious new plan in an effort to grow UK membership by a million over the next five years.
The Credit Union Expansion Project, which 31 organisations have already backed, has been unveiled by the Association of British Credit Unions (ABCUL).
Its development has been aided by a £35.6m investment from the government. ABCUL says this could save consumers almost £1 billion in loan interest repayments.
A “board range of income groups” are being targeted by the project, which will see greater centralisation and allow individual organisations to focus on serving their members.
It’s hoped that the scheme will go some way to increasing the UK’s involvement in credit unions – member-only societies that provide financial planning, credit at competitive rates and other financial services.
In March 2012, credit union membership in England, Scotland and Wales passed one million for the first time. But in Ireland, 70% of the population belongs to a credit union, while in the US and Canada, the figure is around 43%.
Credit unions are also growing fast in eastern Europe, parts of South America, Africa and south-east Asia.
Mark Lyonette, chief executive of ABCUL, said, “Consumers will soon be able to benefit from the latest online technology to sign up to credit union services such as current accounts, budgeting accounts and cash ISAs.
“A centralised hub will automate the delivery of products so that members can also access credit union services through secure connections to other networks. It is hoped that this will include the Post Office network.”
He added, “Credit unions will retain their local status and community focus, but work together where they can benefit from pooling knowledge and resources. This will give members the best of both worlds.”
In having members as opposed to customers, credit unions work on the basis that people’s wellbeing is put first. Members are given a share of their credit union’s profit at the end of the year in the form of a dividend, and also have the authority to elect the board of directors in a democratic one vote per person system.
Speaking about the new scheme, Vincent Thomas, chair of London Plus Credit Union, said, “As well as being better able to compete with less ethical lenders, it will allow us to offer services to the whole community – not just those on lower incomes.”