Giving credit where it’s due
It has to be said that credit unions have had to cope with a bit of a bad press, having been lumped together with payday lenders and generally seen as ‘poor people’s banks’.
So when Royalty and a Hollywood actor declared they were members and showed up at the offices of Capital Credit Union (CCU) in Edinburgh’s Stockbridge area, it was enough to show that the movement was being treated with a little more respect.
Prince Charles’ wife the Duchess of Cornwall is an ambassador, while Michael Sheen – famous for playing Tony Blair in The Queen and Brian Clough in the Damned United – recently lent his hand to the launch of a Scottish government campaign to promote credit unions.
Not that the poorer people have been abandoned. Far from it. The reason why the Duchess and the film star are helping to spread the word is that they believe in the philosophy behind credit unions and their social mission to improve the lives of those who struggle to make ends meet.
“Getting the Duchess and Michael Sheen behind us gives us a bit more credibility,” says Marlene Shiels, chief executive of CCU, tucked away in Hamilton Place where the clientele includes some of this middle class enclave’s less well-off and largely hidden population.
“The more people we get with a high profile showing their support the better it is for us to change the public’s perception of what we do,” she says.
While the mission is focused on helping the lower paid and the unemployed, it depends on those with regular and higher income to deposit their cash. About 75% of customers are what could be described as “financially stable” – including some chief executives – and they help to support the 25% on state benefits.
“They’re all treated equally, with the same range of products and services,” says Shiels, who is about to mark 30 years with CCU, having been with the business since it was set up by Lothian Regional Council.
She was working in Human Resources at the time and it was after filling in for someone who was off ill that she landed a volunteer role in the fledgling union that eventually led to an executive position. By 2002 she was chief executive.
It now has 23,000 members, equal to the number of employees at Lothian Council back in 1989. Since then it has loaned £175 million and members have saved twice that figure.
The first indication of the old image disappearing was in the aftermath of the 2008/09 financial crash when the reputation of the banks took a pounding. Savers and borrowers turned to institutions that were seen as safe and ethical and the credit unions suddenly found they were in demand.
“In those first few years after the crash we could barely keep up with the number of people opening accounts because of the mistrust in the banks,” says Shiels, adding that members benefited hugely from annual dividends paid out.
“We were growing [membership] by at least 10% a year and at its peak in 2010, 2011 by up to 20%.”
Attention is now turning to how the credit unions evolve as the banks repair their balance sheets and begin to re-establish their pre-eminence. As full service financial institutions they provide a considerable challenge to their smaller cousins which are limited in law as to what they can do.
“One of the biggest concerns we have is that the Credit Union Act of 1979 is not fit for purpose,” says Shiels. “It needs an overhaul. It was written by bankers, which tells you a lot. It is very restrictive in what we can do.”
Essentially, the act dictates that the activities of a credit union have to be linked to savings and loans. It means they cannot sell insurance or hire purchase (even though this is a form of loan). The regulators are “sympathetic”, says Shiels, but the government’s Brexit agenda is suffocating the legislative programme and the Treasury is struggling to force time to introduce reforms.
In the meantime, CCU is working on modernising its operations through a digital transformation programme that will see it issue new products and, hopefully, attract a new generation of young customers.
“They tell us they want to bank on their phones and tablets,” says Shiels who has brought in 29-year-old Yasemin Guven to help digitise the service with the help of £200,000 set aside for investment in the project.
Shiels says: “The young don’t care if we have branches, they want slick and quick. They’re more interested in apps and webchats.”
There is also a plan, in conjunction with a group of other credit unions, to introduce a new form of current account. Capital ran a current account for seven years supported by the Co-operative Bank. It proved too expensive, says Shiels, and was wound up by 2012.
Only the London Mutual credit union now offers a current account (the Duchess of Cornwall is a customer, as are her grandchildren) but the new account will not be backed by a clearing bank. Instead it will be driven by superfast technology.
Shiels is watching progress on a pilot programme in Liverpool and hopes to introduce either a debit or credit card next year. “The technology marks the death of the traditional current account. You no longer need a bank to make this work,” she says.
If these developments mark an exciting future, at the root of the day job is dealing with the same issues, including clients who have found it hard to raise loans and mortgages elsewhere, or who live a hand-to-mouth existence.
“Nine million people are living from pay cheque to pay cheque in the UK,” says Shiels. “They have no savings.”
This is the day-to-day challenge facing her modest staff of 16 full-time equivalents.
“Every day I know that each one of them will hope to leave this office knowing they have helped someone,” she says. “That’s how we’re making a difference.”
Occupation: Chief executive Capital Credit Union
Education: Edinburgh University (MBA)
Career Highlights: Lothian Regional Council (initially HR, followed by other roles); Capital Credit Union volunteer, business development officer, CEO
What makes you angry?
Injustice and treating people with fewer means badly. It makes me sad when people are not given a second chance. I also hate cruelty to animals.
How do you unwind?
Walking my two dogs
Awarded an OBE in 2016 for services in the financial services sector and for voluntary work in Africa
If you could invite three people from the past or present to dinner, who would you choose?
The Duchess of Cornwall. I am an adviser to her on credit unions and I’d like to get to know her better. I’m sure she is good fun.
Lois Kitsch. She is a pioneer of the credit union movement in Florida and my mentor.
Cher. I lover her music. I would get her to sing