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…


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?

Appointment to Haven Credit Union

On Friday 13 March 2015 I was appointed Administrator of Haven Credit Union Limited, a credit unions that operates in and around Milford Haven in Pembrokeshire.

On or around 18 March, all adult and child savers, with the exception of Child Trust Funds savers, should have received a letter or a cheque from the Financial Services Compensation Scheme to repay their savings.  Savers were able to get their money back so very quickly largely due to the very hard work of one member of staff at the Credit Union – Kath, your efforts are much appreciated, thank you so very much.

This is the second credit union over which I’ve been appointed, in both cases because efforts to merge with other credit unions proved unsuccessful and the regulator’s solvency targets were not met, such that the credit unions were effectively told in no uncertain terms by the regulator to ‘close down the credit union through a formal insolvency process or we will’.  This meant that both credit unions had to be put into a formal insolvency process despite the fact they had enjoyed, and continued to enjoy until the end, fantastic support from a committed team of hard working, loyal, staff, volunteers and directors.  For me, it’s a tragedy that all your hard work over 20 plus years should come to this.   I hope that the way that I am conducting my role somehow makes your experience of the process less painful for you and your members – I believe that credit union ‘insolvencies’ carry their own ‘problem areas’ where tact, diplomacy and prior experience of how to work with the regulators, members and board, make a huge difference in the outcome – they are unlike any other formal insolvency, this isn’t ‘failure’ as you’d know it in normal limited company terms.

If you are a saver and for some reason have not yet seen your savings reimbursed by the FSCS, say because you’ve moved address and not told the credit union, please email my colleague Angela – – or call me or Angela on our freephone 0800 231 5788.  We will get your money to you, don’t worry, it is safe.  If you are a Child Trust Funds saver, I’m working hard to explore your options – your money will be transferred to another provider of your choice, you cannot simply have a cheque like the other savers – I will be in touch imminently.