Credit unions are different to private businesses and limited companies as they are democratically owned and controlled by their members, and we were delighted when over 400 of our members signed up for our online AGM recently.
As a credit union, our main objective is to encourage people to save for the future, in order to prevent problems with debt. At times when our members need to borrow, or when they are struggling to meet the high cost of existing borrowing, we offer low cost Saver Loans that reduce the cost of borrowing to manageable levels.
We also provide guidance and support with budgeting and dealing with debt, and over time our members move from being borrowers to being savers, greatly improving family finances.
Credit Union Chief Executive Martin Groombridge said: “A credit union is a type of financial co-operative and so we operate differently to businesses owned by shareholders. Our Board of Directors is directly elected by and from our membership, on a one person one vote basis, and every member has an equal say in the running of the business.
“This is the reason we have different ethics, values and principles to most of our competitors in the financial services market, and why we return any financial surplus to our members in the local community, rather than to wealthy individuals in offshore tax havens.
“These co-operative values and principles set us apart as a more democratic and fair type of business. In addition, our wider social goals contribute towards the alleviation of poverty within the community as well as to the economic regeneration of the community.”
A number of years ago, financial analysts from a leading City banking institution made an assessment of the social and financial impact of our lending business.
They researched all of our first-time borrowers over the preceding three months, and analysed where they had previously been borrowing and at what cost. From this they were then able to determine that for every £1 a member saves with us, and that we then lend to displace existing high cost debt, our members will save £1.25 each year in interests, bank charges and fees.
During 2019-20 we issued loans to the value of £4,512,000 to our members. Based on this formula, they are estimated to have saved over £5,564,000 in interest by transferring high-cost debts to the Credit Union. Over the next few years, we forecast a financial benefit to our members, and the wider community, of nearly of £100 million!