Over the past few months Karen Bennett has seen what she describes as a “seismic shift” in peoples’ finances due to the cost-of-living crisis.
“We are seeing a lot more people coming in who are really struggling on a day-to-day basis,” said Karen, who is Chief Executive of Knowsley-based Enterprise Credit Union (ECU), one of the biggest Community Credit Unions in the UK.
Covering the whole of Merseyside and Warrington, ECU has 24,500 members who all have money saved with the not-for-profit organisation and who also have the option to take out loans.
ECU’s head office is in Huyton, and it has another office nearby in Pilch Lane and a third in St Helens. Its team also staffs regular pop-up branches within businesses and community centres, often just to raise awareness or offer advice on budgeting and support.
Currently, ECU holds around £32m in savings and has loans out totalling £33m, utilising its reserves to make up the difference. It typically lends out around £23m each year.
It has a policy of not saying ‘no’ to loan requests unless “absolutely necessary”. However, with the cost-of-living crisis stretching peoples’ finances like they haven’t for a generation, Karen’s team is faced with some difficult decisions.
“At the same time, we are saying ‘no’ to more and more people because they are already overstretched with borrowing. And that is a real challenge for us because we don’t like to say no, I don’t think any credit union wants to do that,” she said.
“Of course, as an organisation, we do need to be sustainable. All the money we are lending out is our members’ savings - it belongs to them, and we have to do everything in our power to ensure that money is repaid.
“People are not only being hit by big rises in energy costs, but also with food and day to day expenses. It is not just people on benefits who are coming in for help. We are seeing people coming in who are employed and on what was previously seen as a good wage.
“They are coming to us for a couple of hundred pounds because they can’t make ends meet month to month. We are trying not to encourage borrowing for day-to-day expenses.
“We don’t want to do that. But in some cases, people just need that bit of freedom to get their heads above water.”
“Our solutions team is stretched because they are working with so many members on things such as payments breaks or loan freezes and new lower payment plans.”
A credit union is a ‘mutual’ or a cooperative society. It is owned by its members, not by shareholders. Rather than being focused on profit they provide “ethical and fair” financial products for their members.
Like all credit unions in the UK, ECU is regulated by the Prudential Regulation Authority and the Financial Conduct Authority. It is also part of the Financial Services Compensation Scheme.
This is a statutory Deposit Guarantee Scheme that protects eligible deposits up to a maximum of £85,000 per member should the credit union fail.
Karen explained: “Enterprise Credit Union has been going for 32 years. We are a financial cooperative. We have more than 24,500 people who save and borrow together. It is owned by the members.
“The shares we hold belong to people who live or work in our communities. The money, the money we use to lend out comes from those shares.
“In some cases, we are dealing with riskier loans that wouldn’t be approved by a high street bank or lender. We don’t just go with what the computer says - we look at the whole picture. our focus is on affordability and the whole financial situation of an individual.
“We look at how they are managing their money on a weekly or monthly basis. It's not just about whether they have a good credit file or a bad credit file. We are looking at what they can afford.
One of our priorities this year is to encourage small long-term savings fund, for or maybe just a fallback - for when the washing machine breaks etc.
Karen stresses the credit union does not offer financial advice, as it is not licensed to do so. She added: “This year we were delighted to launch the support hub we have created for our members. That includes CU@Work well being events, webinars and helping people with budgeting and signposting etc.
“The CU@Work has been a great success, with lots of employers signing up to offer payroll deductions for their staff to encourage financial wellbeing.
“We have now expanded this to community events and have a great dedicated team working with community groups and other partner agencies in the Merseyside area.
“With the cost-of-living crisis I don’t think we are out of the woods yet, so over the next year or so we expect to see people continue to struggle. We just want to make sure we provide that support and stability where we can.”
For the past 11 years ECU has been able to pay its members a dividend on their savings of at least 2% a year, something Karen is proud of. It also runs a corporate membership which currently has around 43 members.
“Our corporate members know they are helping the community by investing in us and they get a good return on their money,” added Karen.
“I think it is a win-win for any corporate member. They know they are investing in a sound organisation and from a CSR point of view they know we are only here to help the community.
“Any surplus above what we pay out to members goes into our reserves - our rainy-day fund. We are a very strong credit union. Our capital to asset ratio is just under 20% which is one of the highest in the country.”
Karen spoke about the desire to expand its reach to support the tens of thousands of students living in Liverpool.
She explained: “Many students in the city are struggling with managing their money, many have easy access to student loans, overdrafts, payday loans etc. It’s one of our strategic priorities to work with these young people and highlight the benefits of being a credit union member.”
For now, the main focus of Karen and her 26-strong team is to help their members navigate through what has become the worst financial crisis for decades, with inflation now well into double figures.
She said: “I think the beauty for us is that so many of our members have savings with us they can draw down on that to help see them through to pay day or for those emergencies in life.
“We are seeing a lot more people struggling. But parents still want to do Christmas for their kids. You can’t say to a four-year-old ‘Christmas is cancelled’.
“Kids are still outgrowing their school trousers and they still need new trainers. But people’s normal available income is now so stretched that they have little or no leeway for the one-off costs.
“Last year I may have seen a £10m loan portfolio predominantly for Christmas. But what we did find were people increasingly saying, ‘I can’t wait for Christmas - I need my loan now to survive’.
“In my opinion, we are without doubt, the best community credit union in the country. Our vision is very clear - we are here to help our members navigate these difficult times. They know we are with them for the good times as well as the bad times. We’re just People Helping People
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