President, Chair or Director of a credit union that’s struggling? – read our great offering…

If you are the president, chair or a director of a credit union that is struggling, possibly even insolvent, the last thing you need is another bill, but the first thing you need is great support from people who have been down this road before.  Yes, credit unions are very, very different from most other organisations…

With this in mind, we are offering you a great deal:

  1. We will never charge you for either our travelling time or travelling expenses – whether this be pre- or post any formal insolvency appointment;
  2. Our first meeting with the board to assess your situation and explore with you your options is entirely free of charge.

This means that wherever you are in England or Wales you can be assured of getting the best possible support, when you need it most, without having to worry about what it costs.

Call me on 01902 672323, or my mobile 07813 102014, if you’d like to know more about how we can help you…

Paul Brindley

Licensed insolvency practitioner & Credit Union expert

 

President, Chair or Director of a credit union that's struggling? – read our great offering…

If you are the president, chair or a director of a credit union that is struggling, possibly even insolvent, the last thing you need is another bill, but the first thing you need is great support from people who have been down this road before.  Yes, credit unions are very, very different from most other organisations…

With this in mind, we are offering you a great deal:

  1. We will never charge you for either our travelling time or travelling expenses – whether this be pre- or post any formal insolvency appointment;
  2. Our first meeting with the board to assess your situation and explore with you your options is entirely free of charge.

This means that wherever you are in England or Wales you can be assured of getting the best possible support, when you need it most, without having to worry about what it costs.

Call me on 01902 672323, or my mobile 07813 102014, if you’d like to know more about how we can help you…

Paul Brindley

Licensed insolvency practitioner & Credit Union expert

 

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.

Another (small) screw in the coffin of smaller community credit unions

A good many small community based credit unions have had a torrid time in recent years and probably right now aren’t seeing much of an improvement.  The Co-Op Bank’s decision to cut the interest it pays on its community bank accounts – such s their Community Directplus, Co-Operatives Directplu and Social Enterprise Directplus accounts – will prove to be another, small and slow, but certain turn on the screw in the coffin of already beleagured credit unions.

Small community based credit unions are really struggling – at best, they have seen flat income levels, at worst they’ve seen their income fall away, especially from grants and interest receipts.   Yet there is often little opportunity for them to reduce their overheads in line with the fall in income.  Trying to increase income by growing the loan book can often carry a disproportionate risk of bad debts so for some they have a stark choice – grow or merge or die a death of a thousand cuts.  The Co-Op decision will prove to be just another cut…

Let’s look at what the Co-Op is doing…

Interest rates paid on customer balances have never been lower, certainly not in my lifetime.  Until June the Co-Op will be paying a tiered rate of interest – Nil% on balances up to £1,999; 0.12%  on balances £2,000 to £9,999; 0.15% on balances £10,000 to £24,999; 0.18% on balances £25,000 to £99,999; 0.21% on balances £100,000 to £249,999; and 0.25% on balances over £250,000.

That’s to say the most the Co-Op will ever pay any credit union right now is one quarter of one per cent per annum… peanuts.

Yet those peanuts are being crushed!

The new rates from June 2015 will be: balances up to £24,999 Nothing, yes absolutely nothing – the Co-Op will get to keep your money for free!; £25,000 to £99,999 0.06% – a third of the already derisory amount it had paid previously; £100,000 to £249,000 0.09% – less than half it had previously paid; £250,000 to £499,000 0.18% – a cut of one third from the rate it had paid previously; over £500,000 0.25%, no change.

The message is clear… the Co-Op isn’t interested in supporting small organisations, it’s using you, the small credit union, to extract itself from its own financial difficulties … it doesn’t have the cohonas to abuse bigger organisations in the same way as they’re prepared to abuse you.

So it’s you, the smaller community based credit unions, and organisations just like you who will feel the brunt of this decision… it will be another straw on the camel’s back…

You see, right now, because you’re getting virtually nothing on the money you are sitting on and with additional grant income difficult to come by, the only way you can meet the regulator’s solvency targets might be by increasing the interest you receive on your loan book.  As you’re limited by law as to the maximum interest rate you can charge on the loans you make, this means you need to grow your loan volumes – the number of loans you put out and the amount you loan out.

The issue is you need to do this without increasing your bad debts.  Desperate people will go to any lengths – you will be lied to, some applications will be pure fabrication. How robust are your application procedures throughout your credit union?  You might get credit reports on potential new lending, but how reliable are those reports? – they are not as accurate as you’d hope!  And you probably can’t always rely on your longstanding members’ past savings history as an indication of their ability to repay any new loans – because people have so many ways nowadays of avoiding repaying their debts – not just the formal insolvency processes of bankruptcy, DRO, and IVA, and informal debt solutions such as DMP and DRO, but also pleading poverty in any debt collection process passing through the courts, and even disappearing.

It’s easy to see the situation whereby a credit union that’s already struggling with the the regulator could be forced into administration and then closure because of its bad debt experience and low level of bank interest income.