Brown urges credit unions to set agenda
Gordon Brown has praised credit unions for their work to tackle inequality and called on them to set the agenda for the financial system.
The former prime minister said: “We have seen the biggest financial crisis of our history which was caused by the banks forgetting the basic values of fairness and responsibility which we all adhere to as a matter of course in our personal and professional lives.”
Addressing the annual conference in Glasgow on Monday of the World Council of Credit Unions, Mr Brown said: “Credit unions, which have already seen fantastic growth in recent years, are faced with enormous opportunities because they are based on fundamental values of fairness and responsibility.”
Mark Lyonette, chief executive of the Association of British Credit Unions, told the conference that recent changes to their legal status, combined with £73m of UK government funding, would help credit unions reach out to many more people.
“They will be able to provide services to community groups and local businesses, and they will be able to pay interest on savings for the first time, instead of being restricted to paying a dividend,” he said.
Mr Lyonette said the government was currently studying the feasibility of investing some of the funds it promised in March in a central banking platform for the sector that could vastly increase access to credit union services, as well as offering members increased services and cost efficiencies.
“This would also allow a link up to the Post Office network, which the vast majority of the British population already visit,” he said. “With 11,500 branches there is one with easy reach of just about everyone in the country.”
Mr Lyonette said his trade association wanted people to be able to walk into any Post Office, join their local credit union and carry out real-time transactions.
The World Council of Credit Unions, said that – in spite of a global recession – international credit union membership grew by 17 per cent between 2005 and 2009. In Great Britain, credit union membership has increased by 57 per cent and assets have grown by 37 per cent from 2005-9.
Cuna Mutual Group, the world’s largest credit union insurer, attributed the continuing growth of the credit union movement to an increasing consumer desire to use mutuals and co-operatives.
It said this was given further impetus by the banking crisis. As purse strings tightened and the traditional banking model was questioned, consumers were looking to fairer, more transparent providers who prioritised their needs over short-term financial gain.
Paul Walsh, chief executive of Cuna Mutual Europe, said: “High street banks are increasingly withdrawing from localism to reduce costs; and in many cases they are closing down branches and pushing customers to online services. As mutual lenders and credit unions offer a more personalised, local service, they are becoming even more favoured and loved by consumers.”
This article is by Andrew Bolger, Scotland Correspondent for the Financial Times and appeared on the 26th July 2011