The Hammersmith Credit Union reaches its second birthday, as Brent also launch a similar service.
H&F Credit Union is a not-for-profit bank, effectively owned by its “members”, those who save with it. Credit Unions use the savings that the community put in to lend money to those who need it as much lower interest rates than commercial banks or the many “loan sharks” that prey on the vulnerable and indebted. In its two-year life it has issued almost 600 loans to local residents.
As well as protecting borrowers, and encouraging saving, by stopping unscrupulous lenders extracting and possibly exporting extortionate profits, they ensure that as much money as possible is recirculated locally, keeping local economies moving.
H&F Credit Union was launched in December 2008, with £25,000 of initial support from the council, and now has over 1,400 members with savings of more than £400,000 and has issued a total of 585 loans totalling over £380,000.
Loan-sharking is endemic in the UK, the Financial Inclusion Centre found in a study that over 100,000 families in the UK have borrowed a total of £29million from loan sharks.The average sum borrowed was £288 but the average amount repaid was £820.
Credit Unions offer protection to borrowers, without undue risk or disadvantage to savers. They are still more popular overseas, in the UK, they provide credit for only 1% of the population. Worldwide there are more than 42,000 credit unions, with over 160 million members (2.5% of the world’s population).
Hammersmith & Fulham Council, awarded the Credit Union £25,000 towards setting up two years ago and in July 2010 extended its commitment by giving the organisation an additional £31,500.
Among schemes operated by the Credit Union is a payroll initiative which has seen some of the borough’s largest employers including the council, H&F Homes and Notting Hill Housing Trust encouraging their staff to save via their monthly payslips.
The Credit Union also works closely with H&F Citizens Advice to help people manage debts and get their finances back on track and also has close links with the Illegal Money Lending Team for London to help deal with criminal loan sharks. In addition, the Credit Union visits local schools to introduce children to effective money management.
Credit Union Chairman, Vincent Thomas, said: “Through our loans we have saved the community nearly £250,000 – money that is recirculated instead of being drained out of the community in high interest rates charged by doorstep lenders, money shops and illegal loan sharks. This community benefit will grow to more than £500,000 in the coming year and over £1m the next.”
“Within Hammersmith & Fulham in the coming year, our focus will be on expanding our services in the north of the borough – particularly the White City and Shepherds Bush areas; getting more employers onboard with our Payroll scheme; working with partners to make our services more accessible to council and housing association tenants; and creating junior savers schemes in local schools.”
H&F Credit Union has also opened discussions with the Royal Borough of Kensington & Chelsea who want to provide similar services for people living and working in that area.
Working together on a credit union is something Brent and Ealing have been doing, with Brent Housing Partnership (BHP) promoting a credit union delivered in partnership with Ealing Credit Union, which is run by Credit Union Solutions, who also run Thamesbank Credit Union, whih LB Hounslow recommend ia a link from their website to residents of Brentford, Isleworth, Osterley and Chiswick.
Kathy Ellison, Chair of the BHP Board, said: “We are very excited by the launch of the Credit Union for our residents and staff. We want to give everyone the tools to be financially independent. They can start managing their finances, saving for expected and unexpected costs, and be able to take out affordable loans where necessary. Many of our residents and staff are facing hardship in these difficult times and we want to help them access the right support and keep on top of their finances.”
See also the Association of British Credit Unions for more information.