Today is Blog Action Day about poverty. As a member of several cooperatives, I have a pretty strong hope that the responsible lending of credit unions can help people escape from poverty. The basic process of a credit union is that you save for a while, then when you’ve shown that you will put aside that amount of money regularly, you can borrow some multiple of it and repay at the same rate you were saving. In addition, you get a voice in controlling the credit union itself, although it is limited by financial services regulations and so on.
At yesterday’s meeting of the Cooperatives-SW board in Taunton, some members expressed concern about a “social enterprise” called South-West Pound backed by a company called South West Community Banking Partnership. Although it’s called that, apparently it’s not a bank and also not a credit union: its members don’t manage it. It’s working with credit unions, but I’m very unclear on how it’s regulated. From the few details on their website, it looks to me like it could even be running a Farepak-style scheme which happens to hold deposits in credit unions instead of banks. Why is concealing member-controlled unions allowable as a “social enterprise”? Why would anyone go to a “community banking partnership” instead of direct to a credit union? (Coo, I’m getting a bit angry again, both at the lack of information and the hide-them-to-promote-them idea.)
Tomorrow (Thu 16 Oct) is International Credit Union Day. If you’ve not already done so, please go open an account and help your local community to fund itself, then see if you can get involved in publicising them to communities who suffer financial exclusion.
I first joined a credit union nearly ten years ago, and it still gives me great service, even though I moved away from their area a while back.
On Tuesday, inspired by International Credit Union Day, I went to the North Wilts Credit Union collection point and signed up.
Credit Unions Rock. That is all.
Following on from MJ Ray’s posting dated 15.10.08 I should like to offer a belatd clarification of what we ate South West Pound do.
We are inded the face of the Community Banking Partnership currently operating in Devon., We are nothing like Farepak and anm surprised that anyone should consoider this to be the case. There are a nmber of CBPs across the country and ours offers support by way of a team of Outreach Workers on Light Touch financial support from budgeting to benefits support, savings and loan support through our partnership with Credit Unions as well as running Financial Capability courses and advice on fuel efficiency – I should be more than happy to attenmd a meeting of the Co-Operatives and explain further.
Thanks S R Opie. I’ll let the Cooperatives SW chair and secretary know. I think the next meetings are 6 April in Bristol and some time in July in Plymouth.
Could you answer the questions I asked above? 1. Are you concealing member-controlled unions? 2. Why is South West Pound a “social enterprise”? 3. Why would anyone go to a “community banking partnership” instead of direct to a credit union?
S R Opie’s post allows us to find the answers to the mysteries.
Devon Pound’s website seems to be down, but we can guess that this group has similar objectives:
http://www.shantscbp.org.uk/SHCBP/What_We_Do.html
Closer working of these CBPs with co-operative federations like ABCUL, ACE and Co-operatives SW should decrease the distrust, because, like MJ, I cannot imagine what a ‘one-stop solution to financial inclusion’ would look like. However, some of the heads round the table: retail bankers, CUs, CABs, housing associations … sound like the right people to make a start, if that is a worthwhile goal.
I took the liberty of digging up some more ‘CBP’ links from Google.
Steve Opie posted some slides on the first year or two of operation here:
http://www.ruralcommunities.gov.uk/files/Quids%20In%200408.pdf
Here is the Devon Pound business plan:
http://74.125.77.132/search?q=cache:Q8xPQKBOndEJ:www.devonjobs.gov.uk/attachments/710/SDM%2520AI.doc+community+banking+partnership&hl=en&ct=clnk&cd=8&gl=uk
The business plan suggests regulation by the FSA, but I don’t know the firm’s reference number, so I haven’t been able to turn up a listing in the FSA Register. If they take deposits (to pass on to credit unions), I can’t imagine they skipped the step of FSA registration.
Hi All. I stumbled across this blog whilst researching community banking partnerships for a client, during which I’ve had a long and co-operative supportive chat with the Ops Director for the South West Pound (SWP, Devon Pound as was) so I may have a bit more light to shed on MJ’s questions.
1. Concealing credit unions? According to SWP they go and do one to one advice with people in their own homes, many of whom they refer as potential members to the SW credit unions that they work in partnership with and are strong supporters of (the man I spoke to couln’t have been more complimentary about CUs).
2. Social Enterprise? Hmmm (that’s partly a hmmm for the whole issue of social enterprise by the way, don’t get me started). SWP & CBPs in general don’t handle money for the people they help, instead referring them on to partner organisations, like credit unions. In this way they are more like a personal finance specific Citizens Advice Bureau. CABs may also be partner orgs in a CBP. Theoretically they may be social enterprises if they are contracted by companies / organisations (e.g. utility companies) to provide financial support & advice to people who need it and so are delivering a service for a financial payment. This is different from a grant, which is a gift and therefore should have no right to expect anything (good or service) in return.
3. Why CBP & not CU (or for that matter the CAB)? This is about scale & geography. In an ideal world (well my ideal world anyway) there would be a big enough credit union in the SW to send out advice workers to everyone in the region who is financially excluded and/or needs financial help. Sadly it’s not an ideal world and there are many problems with this. The CU model is a bit chicken & egg as you need a critical mass of members (circa 7K I read) to reach a point where the CU can employ the necessary staff, and without the staff it’s difficult to reach critical mass. This is particularly so in a very rural area like the SW. CABs face similar different resource shortage problems but with a similar impact i.e. they can’t do outreach into the whole of the rural SW. AS a CBP what SWP tells me they are trying to do is to join up the dots and glue the financial inclusion picture together. It was the express desire of the man that I spoke to that SWP would help strengthen the CUs in the SW by referring people in to them in a way that grows CU membership. Perhaps our question should not be why would you choose to go to a CBP but why are CBPs needed?
4. Not a question of MJs but I just thought I’d deal with why can’t I find them on the FSA? Short answer, they’re not regulated by the FSA. They’re not a credit union (they don’t handle people’s money) and they’re not registered as an Industrial & Provident Society (regulated by the FSA) but by Companies House – I downloaded their Memorandum & Articles Of Association and can email them to anyone if you’re sufficiently interested and therefore as sad as me!
I Hope that’s helpful
Jim
PS The South West Pound website is still under construction by the way!