The Church and the Future of Credit Unions

12^th December 2013

ABCUL's Mark Lyonette highlights the role the Church has to play in the future success of credit unions

In a co-ordinated demonstration of support for credit unions, over 40 Bishops visited or joined their local credit union in October. In the wake of comments by the Archbishop of Canterbury in the summer, churches and credit unions are working together to strengthen the provision of local, affordable financial services in the communities they both serve.

Large numbers of credit unions in Britain have had close links with churches for many years, and some, including the first to set up nearly 50 years ago, were formed specifically to meet the needs of congregations of particular churches.

This heritage, coupled with the momentum created by the Archbishop of Canterbury’s support for the sector, creates a perfect foundation for closer collaboration between these two sets of community based organisations.

In a message sent to all churchgoers to mark International Credit Union Day in October The Right Rev. Justin Welby told churchgoers that supporting ‘the development of real lending alternatives, such as credit unions is not an optional activity, but a fundamental part of our witness and service to all God’s people. It is also a chance for us all to redevelop and stimulate local, relational forms of banking focussed on serving the whole community.’

Churches are enthusiastically embracing this message and there are plenty of examples of collaboration at ground level. A number of churches and dioceses, for instance, have put their money where their mouth is and opened up corporate accounts with credit unions.

Although we have been in discussions with the Church of England for some time, this welcome support only came to national media attention on the back of comments about payday lenders. But credit unions don’t just provide an alternative to payday lenders by offering affordable loans; their approach to making saving easy, often through payroll deduction, and lending responsibly over affordable periods of time means payday loans don’t become necessary. Credit unions provide a wide range of financial services in communities and workplaces, and the Church’s recognition of this is welcomed.

Churchgoers are being encouraged to not just support credit unions because they can provide a responsible alternative to those who would otherwise use a payday loan, but make use of them if they need to save or borrow and volunteer their skills to develop them. Credit unions need a wide range of people in membership to be able to have a balanced business and a sustainable future. By communicating this message directly to the 1.7 million people who attend a Church of England church each week, the Archbishop has given credit unions in England a major boost. Similar messages are coming from leaders in the Church of Scotland and Church in Wales.

But credit unions cannot rely on just being seen as a ‘good thing’ if they are to reach the millions of people who currently use high cost choices such as doorstep lenders, rent to buy shops or payday lenders. They cannot provide a real alternative to high street banks for millions of people just by being locally owned and controlled co-operatives.

Most people choose financial services because they offer good value products that they can access conveniently. So while the credit union sector doesn’t want to replicate the business models of other providers – it has a great one of its own – it wants to make sure that people can access their products as easily as they can access any other financial service.

Many credit union members are already able to offer debit cards, ATM and online access and the ease of saving and borrowing via payroll. This needs to be a choice that many more people can make.

The Credit Union Expansion Project, with up to £38 million of investment from the Government, is allowing the sector to expand collaboration and develop products and systems which will enable credit unions to attract many more people. This part of jigsaw is as essential to the development of credit unions as awareness raising, where the Church can play so much of a role.

Just over 1 million people in Britain are members of credit unions at the moment but we know from other sectors around the world that the model has the potential to serve many more; in the US and Canada, over 40% of the population uses a credit union.

Respected organisations such as churches have a vital role to play in letting people know about the services credit unions can provide, contributing towards their strength by using their services, and encouraging people to use their skills to aid their development. We look forward to continuing our conversations at a national level and seeing new local and regional partnerships flourish in the months and years to come.