The Churches Mutual Credit Union Is No Wonga

I wonder if you noticed the coverage in the papers yesterday about the launch of the Churhes Mutual Credit Union. A number of the newspaper articles had headlines suggesting that the Churches involved in this new  venture were taking on the Wonga's of this world. The truth is this project is a long way from moving into the same market as Wonga.  Indeed Credit Unions operate under completely different finanicial rules. However it is a clear strategic move by the churches to begin to offer a practical solution to helping us all see the significance and advantages of using credit unions for saving and also for ethical borrowing. It was extremely gratifying to see the Moderator of the General Assembly of the Church of Scotland Rt Reverend John Chalmers  take part in the launch of this joint church adventure.  It was during the General Assembly of the Church of Scotland in 2012 that the idea of credit unions was highlighted as a genuine alternative to the present banking system for the public to consider.

Here is an extremely funny little video clip written by Alec Shuttleworth for a future Sanctuary First service. It may just encourage more people to think about what happens to our money when we put it in the banks. The music and the script may appear to sound like a famous  comical clerical farce but the resemblance is purely co-incidental. There is  however nothing farcical about the underlying message.  As for the green shirts, ' that must surely be an ecumenical matter!'  A huge thank you to Colin Jamieson for composing the music at short notice 


The credit union seeks to offer a preventative strategy  to debt rather than a solution for those who are in a  debt crisis. Credit Unions often operate as part of a payroll scheme. This encourages employees to save and in turn offers competitive loan products to its members. I'm looking forward to seeing this new credit union being rolled out into the churches in Scotland. 

The  CMCU’s initial strategy is to serve church workers, including ministers and elders  and their families. When it is more established it hopes to be able to develop the common bond to include all church members and additional denominations. Meanwhile a start has been made and hopefully there will be a good take up.  I'm told the CMCU is now open to offer a founders bond. Next month they hope to begin to offer savings accounts to their members and when they have raised enough cash in their kitty they will be offering a car loan scheme.

Here is an extract from a paper written for the Church of Scotland Council of Assembly to help explain the role and significance of credit unions in today's financial climate.

In the past, credit unions have traditionally relied heavily on grant income and were not necessarily viable, sustainable businesses without such grants.  15 years ago the Association of British Credit Unions Ltd (ABCUL) published a groundbreaking report entitled “Towards Sustainable Credit Unions”.  Its central insight was that there was a cogent economic reason the banks did not wish to serve the poor and that credit unions had no future functioning purely as ‘a poor man’s bank’, instead they had to attract a wide cross section of society in order to build sustainable businesses and then be able to meet their social objectives. To achieve this a number of factors were identified as being necessary:

Proportionate and effective regulation (achieved with the Financial Services and Markets Act of 2000).

Enabling legislation (achieved with the Legislative Reform Order of 2012 giving credit unions new powers).
Good Governance (partially achieved by the development of a corporate code of governance for credit unions but poor governance and a lack of skills continues to hold the sector back).
Appropriate investment in products and services in order to attract a wide cross section of society to use the credit unions (currently taking place with the Government funded ‘Credit Union Expansion Project’).

With these factors in place credit unions have every opportunity to build sustainable businesses, they can then leverage their various ‘mutual advantages’ to achieve their social objectives. These advantages, as clearly recognized by the Special Commission on Economic Activity, consists of:

No external shareholders to pay, instead surplus is re-invested or returned to members.
The use of volunteers (both as Board members and administrative assistance) to keep overheads low.
Payroll deduction membership, which keeps overheads low and reduces bad debt.
No staff expecting exorbitant bonuses.
Ideological commitment by members to the credit union ideal.

Churches’ Mutual Credit Union (CMCU) aims to be a high profile credit union that raises the brand image of credit unions. By offering competitive savings and loan products combined with an ease of access to these services that is expected today, CMCU will demonstrate that it can be a financial institution of choice for its members and thereby encourage a wide cross section of society to use credit unions. CMCU also aims to attract high calibre people onto its Board and set high standards of governance so as to disseminate good practice within the sector. 

So the stage is set. A lot of people have been working very hard to deliver this online credit union. All that needs to happen now is for those who are eligible to join.

Leave a reply