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Credit unions

11 October 2013

THE proposed Churches Mutual Credit Union (formerly known as the Anglican Mutual Credit Union), an initiative between the Church of England and the Church of Scotland, is going through a process of authorisation, and is on track to be launched in October 2014.

Initially, membership will be restricted to the ordained and those training for ordination, licensed lay ministers, employees of churches, and members of their households living at home with them. Ten per cent of members can be corporate bodies, such as Anglican or Church of Scotland charities. In due course, plans are to widen access to all active members of congregations. The Methodist Church has been invited to join; and, once the credit union is more established, other denominations could also potentially enjoy membership.

The capital needed to set up the credit union is coming from a variety of sources, including Church of England dioceses, the Church of Scotland, and supportive individuals. The Church Commissioners have recently agreed to take half of the deferred shares required in the business plan, representing a £200,000 investment.

The CMCU could have considerable impact once it is established. In the mean time, churches have already been getting involved.

In Mildenhall, Suffolk, volunteers from St Mary's have been working with the Roman Catholic church, St John's, since late 2010 to run a collection point for the Ipswich and Suffolk Credit Union (ISCU). Collection points function as additional "branches" of existing credit unions, where clients can drop off savings and apply for loans.

The OLM at St Mary's, the Revd Mary Rusted, says that getting started was straightforward. Training was provided by ISCU, and only basic equipment was needed: a printer, photocopier, and a cashbox, plus a room with some privacy. The collection point opens for two hours every week.

Clients deposit savings from as little as 50p a week, and can apply for loans which are processed by ISCU. Cash is transferred to ISCU through a local Paypoint outlet (Paypoint is a network of UK outlets in shops or other businesses, where cash can be transferred or bills paid online).

Mrs Rusted says that they offer a more compassionate service than on the high street, recalling the case of a local man whose benefits were paid late into his bank, sending him overdrawn. He was charged £9. "It made me hopping mad. Most of us would have just gone and had it out with the bank, but this man didn't have the skills to do that."

Doorstep loans still exist in the area, but she is "delighted" about the Archbishop's call to give payday lenders a run for their money.

Although many clients have low incomes, she says that credit unions need members from a wide community in order to provide the funds for others to borrow. Her advice for any church thinking of working with a credit union would be: "Go for it. It's not effortless, but not hugely demanding. You do feel it makes a difference."

Lewisham Plus Credit Union grew out of an initiative by the ecumenical Churches Together in Sydenham, in 1992, responding to the Church of England's report Faith in the City, after the Brixton riots. It has high-street branches in Sydenham, Bromley, and Lewisham, and 9500 members, of which 1500 are junior members (who save using eight collection points in church schools).

The 8000 adult members have £3 million in savings, and only 3000 members borrow. The average loan is £500, which, at a monthly two-per-cent interest rate (26.8 per cent APR), costs £70 over 13 months. Any profits are paid out as a dividend to members.

One of the original 21 founding members, Liam Carlisle, says that the Archbishop's comments about credit unions have had a "Welby effect", and the co-operative has seen an uplift of £50,000 in savings for August compared with those of July.

He advises churches to join with existing credit unions rather than set one up from scratch. It can cost as much as £300,000 to establish a credit union, and take up to two years. "It's much better to positively engage and work with an existing organisation," he says.




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