Briefing Note

					Glenrothes Area Committee


25 May, 2011
Agenda Item No. 11

Credit Union Development
Report by: Joe Fitzpatrick, Head of Local and Community Services
Wards Affected: 14,15 and 16


Purpose
This report illustrates progress on the targets set for increased Credit Union membership
set out in the Credit Union Development Plan 2008-11 and provides an update on new
developments.


Recommendation(s)

      The Committee is asked to:
Agree support from the Glenrothes area Budget with lease costs for Glenrothes premises
for the 18 months. Note the positive progress being made to develop and support
Kingdom Credit Union and the annual increases in membership.


Resource Implications


      Lease until January 2013    £7,500
      Planning Permission         £ 319
      Rates                       £    0
      Solicitor Fees              £ 400
      Service Charge               £1200
      Total                       £9,419


Legal & Risk Implications
      None


Policy & Impact Assessment
      None


Consultation
      None
1.0 Background
   1.1   Credit Unions are owned and managed by their members and have an
         important role to play in combating financial exclusion. They provide access
         to loans with competitive interest rates and encourage saving, which can
         provide a long-term way out of money problems. Kingdom Credit Union
         commenced operations in September 2004 as Glenrothes and Levenmouth
         Credit Union, they later extended their common bond to cover central Fife
         and changed their name to Kingdom Credit Union at that time.


2.0 Issues and Options
   2.1   It is very encouraging to see in attached Table 1 and the bar chart in
         appendix 1 that membership of Kingdom Credit Union has increased
         dramatically over the years. The current membership of 2817 includes 2435
         adults and 382 juniors.
         The number of members from the Glenrothes area is 534
         The number of members from the Kirkcaldy area is 486
         The number of members from the Levenmouth area is 1723
         The remainder from other areas of Fife who have joined due to working in the
         central Fife area.
         The above breakdown reflects the shop front premises Kingdom have in
         Methilhill. Shopfront premises have proved throughout the UK to lead to
         greater membership numbers.
   2.2   Kingdom operates savings clubs within 6 primary schools including Leslie PS
         and Tanshall PS. These savings clubs have been established within schools
         to encourage children to get into the habit of saving from an early age and
         hopefully move the next generation away from the credit culture which has
         developed over a number of years.
   2.3   Since June 2009 Kingdom has been providing growth fund loans in
         partnership with Capital Credit Union in Edinburgh and the DWP. This project
         enables Kingdom to offer immediate loans to those on benefits or low
         income. To date Kingdom have approved 2627 of these loans to a value of
         £1,023.615 with a bad debt write off of 2.5%, one of the lowest in the UK.
         The interest charged by Kingdom on these loans is £95,940 had the same
         amount been borrowed from doorstep lenders the interest would have been
         £820,000 resulting in a saving to the community of £724,000. There are
         currently 920 Growth Fund members, 84 of whom are in the Glenrothes area.
         Two open days have been held in Glenrothes to promote these loans, one at
         the Exit Centre on Thursday 12th May and one at the Collydean
         Neighbourhood Centre on Monday 9th May. 34 new members were signed up
         on these days and it is expected that membership will continue to increase
         from these areas.
   2.4   Other services Kingdom CU offer are:-
         A pre paid debit card. This enables members to have benefits, savings or
         loans transferred onto a debit card enabling them to purchase products by
            telephone or on the internet and to use in shops rather than carrying cash.
            There is a 50p fee to load this card but no charge for use.
            Money Guidance and budgeting support. Until March this year this post was
            funded by the Coalfields Regeneration Trust. Kingdom is now working in
            partnership with CARF to continue the service.
            Internet access. Kingdom now has its own website kingdomcu.co.uk.
            Members can register online for a password and then access their credit
            union account. Various other forms are available to complete and submit
            online including loan application forms.
            Death Benefit. If a member dies any outstanding loan is written off by the
            credit union and any savings held up to £2,000 are doubled and paid to the
            member’s next of kin.
            Payroll Deduction. Employees of Fife Council, Mgt, Donaldsons Timber, Fife
            Gingerbread and Home4good can now have payments deducted directly
            from their salary and paid into the Credit Union.

3.0   FIFE COUNCIL SUPPORT

      3.1   The Fife Forum and individual CUs are supported by the CU Development
            Officer and the Credit Union Development Assistant recruited in August
            2009. The assistant is focusing on schools development and it is expected
            that the recent increased activity within schools will continue.

      3.2   The credit union development officer has a budget of £40,000 awarded from
            the Fairer Scotland Fund for Credit Union Development. This funds staff at
            Benarty and Lochgelly Credit Union and Kingdom Credit Union as well as
            Fife wide marketing and training.

      3.3   Generally Fife Council Services offer free support such as use of meeting
            rooms, photocopying, and access to telephone facilities etc.

            Support is not currently required for Rates Relief, the Small Business Bonus
            Scheme awards 100% rates relief for the value of property currently
            occupied by Fife Credit Unions.

4.0   FUTURE DEVELOPMENT

      4.1   Due to the high uptake of membership in Levenmouth, Kingdom is now
            planning to open shop front premises at 9 Albany Gate, Glenrothes. The Co
            operative who currently hold the lease for these premises until January 2013
            have accepted an offer of £5,000 per annum 50% of the rate they are
            currently paying. Planning permission for change of use has been submitted
            and it is hoped to open this branch by August at the latest. The rateable
            value of these premises along with that of the premises in Methilhill are still
            below £10,000. Kingdom will therefore still be entitled to 100% small
            business rates relief.

      4.2   The Credit Union Accounting Software producer Conaccess has merged with
            Electronic Channel financial Services in Dublin who provide services to the
            more advanced Irish Credit Unions. This merger has enabled Kingdom to
            offer the e-web online account allowing real time access to account
            information. Kingdom hope, in the near future to upgrade to the e-web online
            transaction system which will have the ability to post transactions online, pay
            bills and buy mobile top ups etc.




List of Appendices
      1. Kingdom Membership Figures
      2. Savings and Loans
      3. Interest Comparison Table




Report Contact
Susan Dryburgh
Credit Union Development Officer
Fife House, Glenrothes
Telephone: 08451 555555 + 441243
Email – susan.dryburgh@fife.gov.uk
                                                                                                          Appendix 1
Table 1
                                    Kingdom Credit Union Membership

    Year      2004           2005           2006          2007          2008          2009         2010       2011

   Total       46            171            306            568          794           1432         2388      2817 (to
 Membership                                                                                                   date)

 % Increase                 270%            79%           85%           40%           80%          62%        18%




                    3000

                    2500

                    2000

                    1500                                                                 Members

                    1000

                     500

                       0
                           2004     2005   2006    2007   2008   2009   2010   2011
                                                                                         Appendix 2
Table 2
                            Membership, Savings and Loans Figures



                                                       Total      Total
                     Adult Members   Junior Members                          Loans        Loans
    Credit Union                                      Savings    Savings
                     2009    2010    2009     2010                          Sept 2009    Sept 2010
                                                       2009       2010

   Glenrothes Area    296      517    11      55       £38,509   £129,570      £16,183      £69,953

   Total Kingdom     1404     2063   180      348     £378,760   £574,225     £204,123     £441,697
                                                                                                 APPENDIX 3
                                         LOAN COMPARISON TABLE



                                 Loan      Weekly   No of      Total Amount     Total Charge
           Lender
                                Amount    Payment   Weeks        Payable         for Credit


        Credit Union             £500      £10.25     52          £532.80          £32.80

   LoansAtHome4u.co.uk           £500      £16.65     52          £866.65          £366.65

      Morses Club Ltd            £500      £17.50     50          £875.00          £375.00

Shopacheck Financial Services    £500      £17.50     50          £875.00          £375.00

  Provident Personal Credit      £500      £17.50     52          £910.00          £410.00




                                                    Figures taken from www.lenderscompared.org.uk 14 October 2010

				
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