Credit Where Credit’s Due

Church Urban FundJune 2014

Problem: payday lending

Problem: financial exclusion

‘We considered the alternatives for serving low income consumers and concluded that... credit unions appear to be the only other realistic option.’ Department for Work and Pensions, 2012

Proposed solution: credit unions

‘The Church must... help credit unions to become bigger, better known and easier to access if we want them to compete effectively with high interest lenders.’ Archbishop of Canterbury, 2013

Proposed solution: credit unions

Research asked three questions:

1. Perceive a need?

2. Opinion of credit unions?

3. Role of churches?

How can we help make this happen?

Research asked three questions:

1. Perceive a need?

2. Opinion of credit unions?

3. Role of churches?

How can we help make this happen?

1. Churchgoers do perceive a need

• Not content with current system.

• Want system that values people.

• Want to make ethical decisions, but feel unable to do so.

• Would be willing to move their money.

Research asked three questions:

1. Perceive a need?

2. Opinion of credit unions?

3. Role of churches?

How can we help make this happen?

‘I like the role a credit union can have in building the economic resilience of the community... it’s a financial product with more of a helping hand.’Focus group participant

2. Positive, in principle

However, membership rates are low...

Are you personally a member of a credit union at the moment, or have you ever been in the past?

... because people don’t think they need to join.

Which, if any, of the following statements describe why you haven’t joined a credit union?

Peer influencers could help to persuade.

‘The lady had borrowed a small amount of money and the loan shark was trying to kick the front door in because they hadn’t paid their money back… This lady joined the credit union and put a very small amount of [money in. This means she can] borrow small amounts of money at reasonable interest, but also feel good that she’s giving back.’

Research asked three questions:

1. Perceive a need?

2. Opinion of credit unions?

3. Role of churches?

How can we help make this happen?

'Here’s a practical way of supporting the poor and needy and that’s what Jesus wanted us to do... it’s a way for Christians to put money into an area where... it’s actually going to go out to people that need it.’Focus group participant

3. Believe churches should help

But not sure about being asked to join themselves.

To what extent do you agree or disagree that Christian churches should explore each of these ways to support credit unions?

Conclusions

1. Churchgoers want to be able to bank in an ethical way.

2. They want the church to help develop ethical alternatives.

3. They see credit unions as part of the solution, potentially.

Recommendations

1. Communicate the need to join a credit union.

2. Encourage people to help credit unions become more attractive.

3. Develop network of peer influencers to encourage others to support.

Money Speaks Louder than Words: Credit unions and the role of the Church in

tackling financial exclusion

www.cuf.org.uk/money-speaks

Archbishop’s vision

• To widen access to responsible credit and savings – real alternative to payday loans

• Supporting the development of a modern and expanded credit union sector is key

• Long-term commitment - 10+yrs• Collaborative effort – working in partnership

with, and encouraging, others• Focused on a few strategic, practical initiatives

(1) Financial education

• Working with CUs to promote financial education, starting in church primary schools

• Schools package– Savings club– Accredited lesson plans– Trained volunteers– Whole school approach

(2) Local capacity-building

• Encouraging grassroots church support for CUs and related services – supporting existing work

• Church Credit Champions Network - matching CU needs to parish resources– Engaging churches– Training Credit Champions– Church-based actions

• Church ‘hubs’ providing holistic support, including debt/money advice

(3) Influencing/ lobbying

• Lobbying for regulatory changes to support growth of CU sector and promote more responsible credit and savings

• Harnessing support of high street banks e.g. Lloyds

• Working with, and encouraging, other potential partners

(4) Direct provision of services

• Supporting establishment of Churches Mutual Credit Union – launching in the Autumn

• Exploring other more innovative approaches to responsible credit e.g. Fair for You, crowd-funding

How can the Church help?

• Champions: raising awareness• Clients: active members of CUs• Connectors: using church networks• Capacity-builders: volunteers and buildings• Critical friends: pressure to improve• Collaborators: working together