I spoke at the Association of British Credit Unions conference in Manchester this last weekend, and (as ever) was really heartened to see just how much unsung but wonderful work credit unions are doing in their communities, designing innovative and socially useful products that engineer solid financial behaviour (saving while paying back debt, for instance) and offering a compelling alternative to rip-off merchants who prey on young people, like high cost lenders.
It’s just a shame – and a bit of an outrage, actually – that credit unions are not covered frequently enough in our national press and given the credit they deserve for keeping many young consumers on the straight and narrow. If there was greater coverage of this sector, I do wonder if young people would feel quite as helpless about their money (and mistrustful of the financial sector) as they do.
An example of the valuable services that credit unions offer young people is the Joining Forces scheme, set up with help from the Ministry of Defence in 2015. The initiative aims to direct our armed forces personnel towards three credit unions – Planer Saver, Police Credit Union and London Mutual Credit Union – so they can start to get on a proper financial footing when they return from the front line.
Members of the British army, navy and airforce have been lent £2m by credit unions since Joining Forces started, giving them access to straight-forward and affordable loans while encouraging them to save at the same time. Soldiers, sailors and aircrew are particularly vulnerable when it comes to their money because they may spend long periods away from Britain, creating large holes in their credit history that can make it harder for them to access fairer credit once they get home.
While there are some specialist insurers and mutuals aimed at this more vulnerable consumer segment, there is very little awareness around the issue. Successive governments have also been criticised for neglecting to look after our armed forces as they adjust to civilian life, with payday lenders actively targeting younger service personnel and military charities having to step in and provide more debt advice in recent years.
The reason why credit unions work for their members is because they are OWNED by their members, meaning that they can offer competitive rates of interest on savings and loan products as there are no third-party shareholders to whom profits must be distributed. Credit unions are also able to offer safe and sustainable loans to their members, with deposits protected by the Financial Services Compensation Scheme.
So whether you’re in the armed forces or a civilian, contact your local credit union and you might be surprised at how much they can help you get back on track.