Credit Unions – it’s far from good news, in fact it’s awful!

I don’t know if you saw the news today?  – How the UK’s credit union assets hit £3 billion for the first time ever?  – click here to see the news from ABCUL

Great news, eh?

Well no…

Why?

Well, today, yes the very same day that ABCUL announced this ‘great news’ about assets, a letter hit my desk from the Co-Op Bank saying that they are reducing the interest they will be paying on bank balances me as liquidator of credit unions, and indeed credit unions themselves, hold with them.

The interest rate?    O.03% on balances up £500k.  That’s right, one thirty third of one per cent in interest.

To put it bluntly, bugger all on balances most credit unions might be holding with the Co-Op Bank…about one fiftieth of the inflation rate.

Please let me ask you something…

What’s exactly is the point of credit unions putting their savers’ money with the Co-Op?

Why do they do it?

The vast bulk of the £1.23 billion in credit union saver deposits – the ‘good news’ is its ‘s by 7.8% over the previous year –  yes, one and a quarter billion pounds, a lot of money, and counting! – is earning nothing for savers, not after the credit union costs.

I tell you what the point of credit unions putting their savers’ money with the Co-Op and them paying nothing in interest is…

The Co-Op is bust…

And if it goes under – and it is a shambles – the FSCS also goes under, its pocket is simply not big enough to cope with the Co-Op’s failure.

Put another way, all you savers in credit unions are propping up a bust bank because (1) Co-Operatives are incapable of surviving in this country today in the way they used to be able to, and management are incapable of turning the Co-Op Bank around, it’s a shambles internally; (2) The FSCS cannot pay out if the Co-Op goes bust – we’re talking about a bail-in, rather than bail out (a bail out, some government organisation pays you back all your money: a bail in, you do not get all your money back, you have to write some of it off, you might be told that the £1,00 you had with so and so bank is no only £500.

If Co-Op goes bust, there will be a run on all of the banks.  Co-Op is propped up by credit union savers’ and other ‘soft’ money – if you’re a saver in a credit union, have you really asked where the credit union puts your money?  Hopefully time will paper over the cracks at the Co-Op…- but will it, and why haven’t you been told that your money is at risk, why are you being told that credit unions are a good place for you to put your money safely?

Thanks to all you savers, old and new, you are propping up a bust bank that we cannot afford for it to fail because the system can’t cope with it doing so!

Oh, did no one, not ABCUL, not any credit union, tell you why you’re being encouraged in?

It’s a huge game of pass the parcel!

If you are a saver, you are playing the game, the problem is you’ve no chance of winning a prize, because the music will never stop when you’re holding the parcel.   Instead you’ll be left holding all the wrapping paper for which you will have paid handsomely, and you’ll not get your money back because you will be bailed in…

Still happy with the advice you got to ‘save’ with that credit union?

Will you be suing the advisor for bad advice, like the PPI sellers of yesteryear?

Credit Union Insolvencies

I’ve been looking at the number of credit unions that have gone into formal insolvency over the last ten years or so.

I did this because I simply do not believe all the hype coming from trade associations like ABCUL and some individual credit unions’ marketing departments – you see I think there are major hidden problems in the sector.

The figures  speak for themselves – there’s no let up in the number going under! To me that is a concern when there remains a massive demand for credit union services and the government are saying they’re supporting the movement.

If Abcul and credit unions were more honest about the condition of the sector, perhaps the government would provide more, much needed, support?

By the way, credit union insolvency is a very specialist field.  If you are looking for some insolvency support, my advise to you is to shop around – you see not all insolvency practitioners have any experience in thsi field (however big they may be) and choosing the wrong IP is like marrying in haste – you will repect at leisure the day you make a quick decision.  So carry out a beauty parade of insolvency practitioners – ask them about their previous experience in the sector, get them to be very specific as to how, if you choose them, they will conduct every aspect of the insolvency – make them go into detail, don’t let them take  a broad brush approach, get into the specifics.

Perhaps you should also note that unlike all other firms, I do not charge my travelling time, accommodation or other travelling costs – this could form a big part of the eventual bill.  For you it’s dead money, no value is being delievered for it. You see, it is my policy not to charge these things because my view is if I choose to accept an assignment, wherever it may be, because it’s my choice, the client should not pay for it.  I also don’t charge for attending the board meeting at which the credit union’s board are considering their options, or for preparing a formal written report on their options.  Again something to think about.

 

If you’d like some support with your credit union, call or email me.  My mobile number is 07813 102014, it’s almost always on. My email is paul@midlandsbusinessrecovery.co.uk

Here’s the list…

2015 – 4 so far

Enterprise The Business Credit Union – May 2015; Derby United Credit Union – April 2015; Haven Credit Union Limited – March 2015; Castle & Minster Credit Union – March 2015

 

2014 – 5

Lower Iveagh Credit Union Limited – November 2014; Redcar & Cleveland Money Tree & Glen Credit Union – October 2014; Ballymacarrett Credit Union – October 2014; Glenard Credit Union – June 2014; Wantsum Savers: The Isle of Thanet Credit Union Ltd – 10 February 2014

2013 – 8

South Birmingham Community Credit Union Ltd (know as CommuniSave Credit Union) – July 2013; Carleton Credit Union Limited – June 2013;  Millom & District Credit Union – May 2013;  South Warwickshire Credit Union – April 2013;  Portadown Diamond Credit Union – April 2013; Marches Credit Union – April 2013; Severn Four Credit Union – March 2013;  Cornwall & Isles of Scilly Credit Union – February 2013

2012 – 6

North Yorkshire Credit Union Limited –  November 2012; Tamworth Credit Union Limited – September 2012;  Waltonian Community Credit Union Limited – August 2012;  Pallister Credit Union Limited – May 2012;  Hull East of the River Credit Union Limited – January 2012; Handsworth Breakthrough Credit Union Limited – January 2012

2011 – 8

Gallowhill Credit Union Limited – September 2011;  Lee Bank/Highgate Credit Union Limited – July 2011; Caribbean Parents Group Credit Union Limited – June 2011; Worcestershire Credit Union Limited – June 2011;  Southend Credit Union Limited –  May 2011;  Ilfracombe & District Credit Union Limited – March 2011;  South East Birmingham Communuity Credit Union Limited – January 2011;  Havant Area Savers Credit Union Limited – January 2011

2010 – 10

South Kintyre Credit Union Limited – November 2010;  Tower View Community Credit Union Limited – November 2010;  Three Bees Credit Union Limited – October 2010;  Landsker Community Credit Union Limited – September 2010;  Elswick and Cruddas Park Credit Union Limited – August 2010;  Hackney Credit Union Limited – July 2010;  Splotlands Credit Union Limited – June 2010;  Forest of Dean Credit Union Limited – May 2010;  Edinburgh Hackney Cab Trade Credit Union Limited –  March 2010;  Redcar and District Credit Union Limited – March 2010

2009 – 6

Derby City Credit Union Limited – August 2009;  Hull Northern Credit Union Limited – August 2009;  Eastbourne Community Credit Union –  July 2009; Irvine North Credit Union –  July 2009; St Brendan’s Credit Union Limited – May 2009; South West Durham Credit Union – May 2009

2008 -6

Polmaise Community Credit Union Limited – November 2008;  Khalsa (Bradford) Credit Union Limited – October 2008;  Inner Preston Credit Union – May 2008;  Peterlee Credit Union – March 2008; Rotton Park and Winson Green Credit Union –  March 2008; Edmonton Credit Union Limited – January 2008

2007 -8

Caia Park (Wrexham) Credit Union Limited – December 2007; Streetcred Credit Union Limited – October 2007; Corby Community Credit Union Limited – July 2007;  Ferries Credit Union Limited – July 2007; Fleetwood and District Credit Union Limited – June 2007; Clydesdale Credit Union Limited – May 2007; Skelmersdale Credit Union Limited – April 2007; L27 (Liverpool) Credit Union Limited – January 2007

2006 – 6

Breightmet Credit Union Limited – December 2006; Sheldon Credit Union Limited – November 2006; St Columba’s (Bradford) Save and Credit Union Limited – October 2006; Furness Credit Union Limited – September 2006; Money Tree Credit Union Limited – August 2006; South Airdrie Credit Union Limited – April 2006

2005 – 1

Greater Pollokshaws Credit Union Limited – June 2005

2004 -5

Hackney South Credit Union Limited – November 2004; Employee Credit Union (Luton Borough Council) Limited –  September 2004; Raffles Area Credit Union Limited – July 2004; Dalston Social and Business Credit Union – January 2004; Dudley Estate (Newcastle) Credit Union – January 2004

2003 -9

Ruabon, Cefn and District Credit Union Limited – October 2003; Croydon Branch Union of Communication Workers Credit Union – October 2003; Shepherds Bush Social and Welfare Credit Union – September 2003; Leicester City Council Employees Credit Union – May 2003; Leasowe Credit Union – May 2003; Tendring Dial Credit Union – March 2003;  Guide Post and Scotland Gate Credit Union – March 2003; Fairswan Credit Union – March 2003; Cathall Community Credit Union – March 2003.