Wednesday, 27 July 2011

Cuna Mutual reports Global Growth for Credit Unions

On Tuesday 26th July, at the World Council of Credit Unions annual conference in Glasgow, CUNA Mutual Group – one of the world’s largest mutual insurers – indicated that many of the world Credit Union systems are well positioned for potential sustainable growth in the future. In addition, key statistics from the World Council of Credit Unions reports that, despite a global recession, international credit union membership grew by 17% between 2005 and 2009.

Being held for the first time in the UK, the World Council of Credit Unions Annual Conference brings together Credit Union leaders and decision makers from the 91 countries in which they operate. In previous years it has been hosted in Hong Kong, Barcelona and Las Vegas and this year Glasgow, home of one of the highest concentration of credit union membership in the UK.

CUNA Mutual Group, the world’s largest credit union insurer, attributes the continuing growth of the credit union movement to several factors, including an increasing consumer desire to use mutuals and co-operatives. This was given a further injection by the banking crisis two years ago; as purse strings tighten and the traditional banking model is questioned, consumers are looking to fairer, more transparent providers who prioritise their needs over short term financial gain.

Paul Walsh, CEO of CUNA Mutual Europe, comments, “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.

Over the past five years, all regions in which credit unions operate have experienced positive membership growth, according to the World Council of Credit Unions official statistics. It is the Caribbean, Africa and Europe who are seeing the greatest increases in membership of 76%, 63% and 27% respectively. In Great Britain, credit union membership has increased by 57% and assets have grown by over 37% from 2005-09. Credit Unions in Great Britain increased the loans they advanced by 26% over that period, whilst traditional lenders curtailed consumer loans post the 2007/2008 downturn.

Paul Walsh, CEO of CUNA Mutual Group, added, “In this current economic climate, consumers need to borrow but banks have reduced their consumer loans. Credit unions have capital and are able to continue lending, which can only be good news for the growth of the market.

In Great Britain, with the strong leadership of the Association of British Credit Unions (ABCUL) we are confident that the forthcoming Legislative Reform Order (LRO), government investment and continued membership expansion positions the country’s Credit Unions well for sustained growth”.

Adding further momentum to the UK Credit Unions, the Government recently pledged £73m to support credit unions over the next four years, as a result of the continued work of ABCUL.

Paul Walsh, CEO of CUNA Mutual Group, concluded, “The combined mutual sector here in Great Britain, consisting of Credit Unions, Building Societies and the Co-Operatives, have a central role in the future of our financial sectors and the growth of credit union movement in the UK suggests a strong future for the country’s mutual sector.”



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Tuesday, 12 July 2011

Payplan reveals... Debt: perception versus reality

This week we are delighted to invite Payplan to guest blog on Zero-credit.


With many things in life, reality is usually a far cry from our perceptions. This is just as true when talking about debt. For many years debt has been seen as a taboo subject, no one is in debt so no one talks about it, or so you would think. In reality we help over 100,000 people each year with their financial worries and do the best we can to put them onto the road of debt freedom.

At Payplan we have many specially trained debt advisors who are on hand 13 hours a day 5 days a week to help those who are in debt crisis, regardless of their reality. 

To help us highlight the difference between reality and perception we devised a survey. The survey asked seven simple questions in an attempt to gauge a sample, albeit a small sample, of the public’s perception of debt.

The reality of debt came from our very own client database. We combined all new clients that came into Payplan from March 2010 to March 2011 who entered into either a Debt Management Plan or an Individual Voluntary Arrangement. 

The results revealed what we suspected, people’s perception of debt is far different from reality, proving that what is seen as stereotyping people in debt is wrong, people can and do get into debt regardless of their income, the area they live in or the background they come from.


Payplan Debt Perceptions Infographic 2011

Source: Payplan – IVA and Free Debt Management Plan provider.



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Saturday, 9 July 2011

JRF - could do better...


I've found the conversations challenging JRF's Minimum Income Standard hard this week - I too can live on less. In fact I can cite numerous examples of people who live on considerably less than I do and rarely complain. But that's not the point.

My greatest challenge when first working on Zero-credit came from friends in West Wales - how could a low income household, bereft of private transport, possibly access all of the creditfree assertions I was making? I confess that I was and still am humbled.

Here on my doorstep, we have seen public transport cut, through streets of elderly and infirm - the journey between towns "more efficient" without a detour for these timewasters. A twice weekly round trip to the supermarket is all that's on offer now.

Imprisoned by an imposed loyalty to goods and services, the monopoly over low income earners is complete. Without access to market or discount store, how can people shop around? 

Even greater penalties are born by the bearers of meter keys, who top up at the corner shop only to be met with a premium on other goods too. Every little helps, when value is off the shelf.

It is not simply inflated subsistence costs that drive low income into poverty. The lost opportunity of inaccessible healthcare, education and work delivers a prevalence of foodbanks where none should exist. Convenience for one imposes compromise on another.

In our failure to admit our interdependence, we find the easiest criticisms of the Minumum Income Standard: I can do better, or worse still, you do not need what I can live without. Get off your high horse!

In the depths of poverty, my teens were marked by the purchase of items no average household needs - bow ties, cummerbunds, silk hankies and shoes - investments in my father's trade as an opera singer.

Averages are not a command to blanket uniformity. They count the breadth of every experience to create a benchmark that allows us to track trends. Thus, we cannot pretend that a 20% contraction in the income perceived necessary to maintain living standards is not significant.

It may well be that, after years of credit fuelled excess, society perceives more than is necessary to achieve a minimum standard of living, but what the JRF statistics show is that if this is your opinion, you are in the minority.

Moreover, no matter how right you think you are, making others feel useless and wasteful will not change their behaviour, for just as you will not bend to their will, they will not bend to yours - and there are more of them than you!

The green community has been particularly adept at recognising our need for humility. Guided with can do alternatives, consumers convert suggestions into achievements in which all may feel proud - I changed my lightbulbs, recycled some cans. I'm doing my bit... what's next?

In the plan A or plan B of political correctness, time is running out: if we're in it together, this is global recession; and if global recession, together is precisely how up to our necks in it we are.

By telling us that a representative sample of the population believes that families need 20% more than last year to maintain living standards, the JRF Minimum Income Standards serve as an important wake up call. And I, for one, have no intention of surveying the folorn with an "I told you so". 

Wednesday, 6 July 2011

Money scams - you do the maths!


Yesterday saw the publication of the Joseph Rowntree Foundation's 2011 research into the Minimum Income Standard. Two headline figures stand out:

the cost of a minimum basket of good and services has risen by 43% in the past decade
families need 20% more than last year to maintain living standards

We'd like to add a few more...

more than £160 a year for a bank account than manages bill payments for you
around £65 per household a year, paid in commission to comparison sites
around £25 paid back in interest, on every £100 payday loan

So, when it's your money, we ask you, does this add up, or is it a covert bailout when almost a month's family food bill can be spent on financial services?

Numeracy has remained at approximately four out of every five adults for the past twenty years, whilst personal borrowing increased by almost a third between 2004 and 2008 and has remained roughly the same since. 

Are struggling consumers really financially incapable or is this just another brick in the wall? 

Tuesday, 5 July 2011

Think Banking defend their account...

Some time back, we invited Think Banking to share their rationale for offering a current account at £14.50 a month. We are therefore delighted that Ian Williams - @IWill41 - has agreed to explain it to us.

Last month The Fair Banking Foundation recognised a number of products, including thinkbanking’s current account, with a 3 star accreditation mark, on the basis that the products helped customers manage their money better.

Since then a number of commentators, including Zero-credit, have asked the question “why would you want to pay for a current account when you can get free current accounts and basic bank accounts on the high street?

Well we, and more importantly our customers, would point to a number of reasons.


Firstly, thinkbanking is a very different product from most current accounts. It offers a high level of personalised service to customers who want or need help budgeting. 

Whilst most of us are happy and able to budget each month to ensure that our bills get paid (and we don’t run out of money mid-month) a significant number of people want or need help with this. This is particularly true for thinkbanking customers many of whom have irregular incomes or are paid weekly or fortnightly and receive benefits fortnightly or four-weekly – which makes budgeting for monthly bills that much harder. The account isn’t just for people in debt, indeed many customers use thinkbanking to help them avoid debt by living within their means.

The budgeting service has a number of benefits for customers. Firstly, they are more likely to pay their bills in full. As well as being important and a good thing in its own right, it also means that they aren’t charged by the bill originators (such as mortgage lenders) for missed payments and nor do they go into arrears (which could impact their credit record).

Customers’ money, over and above what is held for bills, is transferred to their card account for them to spend using their debit card or to withdraw via an ATM. So customers know exactly how much they have available to spend at any time. Customers tell us that they value the peace of mind that this gives them.

So for the fee, customers are getting a service that allows them to do more than just pay in and withdraw their money. They are also getting online and text banking as well as access to our UK call centre. And because our system forecasts the balance in customers’ bills accounts our Money Managers are able to offer a pro-active service, calling customers to alert them if it looks like they may not have enough money to pay a bill.

Most of us believe that we enjoy “free” banking from our current account provider (even if we are actually earning no interest on our money). But not all of us. Customers who either go into an unauthorised overdraft or who have items returned unpaid by their bank are usually charged for doing so. In fact the OFT found(1) 1.4 million people paying more than £500 in overdraft or returned items charges in a year. Worryingly 57% of these people had also paid bank charges in the previous year.

These charges don’t just hit those with mainstream current accounts. Basic bank accounts may not offer overdrafts but they still charge for returned items – typically between £8 and £25 per item.

The OFT found that the people who pay these bank charges are often those that can least afford to do so. Many consumers also find bank charges bewildering. By contrast thinkbanking’s monthly fee is clear and transparent.

So what does this mean overall? Well, although it may seem counter-intuitive, paying a simple, transparent, £14.50 a month for a current account saves many of our customers money if they were previously incurring charges through poor money management. And our budgeting service gives them peace of mind that they tell us they place a high value on.

(1) Source OFT March 2010 – Personal Current Accounts in the UK unarranged overdrafts.


Sunday, 3 July 2011

Need to cut down on va va voom?


An interesting statistic came out this week: according to the RAC, about a third of UK drivers say they have been forced to cut down on the number of car journeys they make, because of the price of petrol. At the same time, the liftshare network has seen a 32.5% increase of the number of people signing up to car-share so far this year. 

Every time petrol prices rise, drivers start thinking more about how they can still afford to make their journeys. And by mid-June this year, another 30,000 people had signed up to the free liftshare network to find others going their way, so they could share their cars – thus splitting the fuel costs. 

The impact car-sharing can have on your wallet is dramatic. Thomas Elmitt commutes between Cardiff and Weston super Mare. “If I couldn’t lift-share my daily commute I would be unable to make my commute at all! Lift-sharing saves me ten hours and £40 per week, or over 450 hours and £1,800 annually.”

But there are added bonuses, such as cutting your CO2 emissions, reducing stress levels and - as Thomas has also discovered – the social aspect: “My lift sharing buddy and I are now good friends; His wife did the flowers at my wedding and my wife and I have baby-sat their kids.” 

Over 440,000 people have joined liftshare so far. If you haven’t yet, maybe it’s time to see how much money you could save by car-sharing...! 

Saturday, 2 July 2011

Cashback on debt advice?


It looks as though the spinning wheel has come full circle, as the bottom feeders of the bag-a-bargain food chain jump onto the cashback bandwagon. Pop will eat itself? Just watch credit!

Martyn Saville at Which? asked on Thursday, whether “Debt companies shouldn’t offer Quidco cashback”. Apologies to Martyn - and due credit for raising the issue - but the “best bits” are undoubtedly in the comments.

The black and white portrayal of practices that are inherently grey should tell you that incentives to buy your way out of debt are pure melodrama - each twist and turn of their tawdry plot, designed to part you from your cash.

In what is little more than a price war, watch the demise of big bucks from desperation. And if some marketers fail to get their heads round the uncharted territory of less than vulnerable consumers, they are a welcome addition to the dole queue.

Our advice to the cashback cronies? Do not bite the hand that feeds you. As more of us learn to live within ever decreasing means, we are discounting pretty much all that you say.

Image: Idea go /