London Mutual Credit Union

Last updated

London Mutual Credit Union
Type Credit Union
Industry Financial services
Founded1982
Headquarters London, SE15
United Kingdom
Key people
Lakshman Chandrasekera, CEO
Total assets £30 million (Jun 2020)
Website creditunion.co.uk

London Mutual Credit Union Limited (LMCU) is a not-for-profit member-owned financial co-operative, based in Peckham and operating in the City of Westminster and the London boroughs of Southwark, Lambeth and Camden. The primary lines of business include retail banking, deposit-taking and lending.

Contents

Established in 1982, by June 2020, the credit union had over 31,300 members and 3,600 junior members. [1]

History

The Credit Union was originally established for a London-based local authority staff in 1982, (known as Southwark Council Employees Credit Union) by a small group of volunteers. It was formed to address the economic hardship among low paid manual workers and the local Caribbean community. Like other British credit unions at the time, it was a small savings and loans co-operative which offered its members a limited range of financial products and services. Despite being the first credit union in the UK to operate a payroll deduction scheme, Southwark Council Employees Credit Union only recruited between 200 and 300 members from a workforce of over 12,000 in the first nine years of its existence. [2]

From 1991 onwards, Southwark Council Employees Credit Union implemented a range of reforms, including the introduction of improved IT systems and staff development. In 1997, it opened membership to employees of King's College Hospital, under the name Southwark and Kings Employees Credit Union and, in 1999, as Southwark Credit Union, to anyone living or working in the borough. Southwark Credit Union was among the first British credit unions to adopt the PEARLS financial monitoring system, which increased financial discipline, maximised savings and which lead to the introduction of risk based lending. As part of a drive to develop products and services to meet people's needs, in 2006, the credit union was the first in the UK to offer current accounts, alongside benefit direct accounts, flexible savings accounts, instant and accessible loans. In 2006, Southwark Credit Union became the first credit union to deliver Financial Inclusion Growth Fund loans through a contract with the Department for Work and Pensions.

Mergers

Throughout its early years, the credit union absorbed a number of smaller credit unions in Southwark. The first of these, in 1997, was Camberwell Health Authority Credit Union (established in 1991), followed, in 2001, by the Camberwell Credit Union (established 1980). In 2010, members of Lambeth Savings and Credit Union (established 2006) voted to transfer engagements to Southwark Credit Union, which adopted the present name, extending its common bond to take in the London Borough of Lambeth. [3]

In 2012, LMCU absorbed the Pimlico Credit Union (established 1980), enlarging its south London base to the City of Westminster. [4] Most recently, in 2013, it absorbed Camden Plus Credit Union (established 2006), expanding its area of operation to include London Borough of Camden

Products

In 2012, London Mutual Credit Union became the first British credit union to offer payday loans. [5] The initial 12 months trial for short-term payday loans was completed in 2013. The scheme was funded by the Friends Provident Foundation and the Barclays Community Finance Fund, with project support from the Financial Inclusion Centre. The pilot payday loan received 6,087 applications for an average loan of £238. In the 12-month pilot, 2,923 short-term loans with a value of £687,757 were provided to 1,219 different borrowers. Under the scheme, borrowers could take out a payday loan or spread out repayment over a longer period. 29% of applicants repaid their loan in one month, while 59% of applicants opted to repay their loan over three months. However, in a survey, 66% of applicants said their main reason for taking out a loan with London Mutual was the low cost of borrowing compared to other payday lenders. Only 10% said that the option to repay over a longer period of time was their main reason for choosing the credit union. [6]

According to LMCU, the payday loan pilot saved 1,219 borrowers collectively saved £145,000, or £119 each, compared to borrowing from a high-cost payday lender. The credit union developed its payday and short-term loan products in response to increased use of payday lenders in the London boroughs it serves. Following the completion of the pilot London Mutual Credit Union made its payday loan facility available to anyone living or working in the London boroughs of Southwark, Lambeth, City of Westminster and Camden. [7] Like high-cost payday lenders the credit union allows borrowers to take out a CUOK payday loan online. [8]

Regulation

Registered under the Industrial and Provident Societies Acts, London Mutual Credit Union is a member of the Association of British Credit Unions Limited. [9]

As a financial institution, it is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and PRA, who also regulate banks, building societies and insurance companies. London Mutual is also a member of the Financial Services Compensation Scheme. The Financial Services Compensation Scheme can pay compensation to depositors if a credit union is unable to meet its financial obligations. Most depositors – including most individuals and small businesses – are covered. [10]

See also

Related Research Articles

Payday loan Small, short-term unsecured loan

A payday loan is a short-term unsecured loan, often characterized by high interest rates.

Leeds City Credit Union

Leeds City Credit Union Limited is a not-for-profit member-owned financial co-operative, formed in 1987 and based in the West Yorkshire city of Leeds. White Rose Credit Union, of Wakefield, and Your Loan Shop are trading names of Leeds City Credit Union.

Cooperative banking Type of retail or commercial bank organized cooperatively

Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money in most parts of the world.

The District of Canterbury Credit Union Limited was a savings and loans co-operative based in the cathedral city of Canterbury. In 2011, it merged with the larger Kent Savers Credit Union.

Vancouver City Savings Credit Union, commonly referred to as Vancity, is a member-owned financial co-operative headquartered in Vancouver, British Columbia, Canada. By asset size, Vancity is the largest community credit union in Canada as of 2019, with CA$28.2 billion in assets plus assets under administration, 60 branches and more than 543,000 members.

Payday loans in the United States Overview of payday loans

A payday loan is a small, short-term unsecured loan, "regardless of whether repayment of loans is linked to a borrower's payday." The loans are also sometimes referred to as "cash advances," though that term can also refer to cash provided against a prearranged line of credit such as a credit card. Payday advance loans rely on the consumer having previous payroll and employment records. Legislation regarding payday loans varies widely between different countries and, within the United States, between different states.

North West London Credit Union Limited was a savings and loans co-operative, operating in the north west London boroughs of Barnet and Brent. Based in Grahame Park, it had over 1,000 members and branches in Burnt Oak, Edgware, and Finchley. In 2013, it merged with London Capital Credit Union and the branches were closed.

Wonga.com English payday loan provider

Wonga.com, also known as Wonga, is a former British payday loan firm that was founded in 2006. The company focused on offering short-term, high-cost loans to customers via online applications, and began processing its first loans in 2007. The firm operated across several countries, including the United Kingdom, Spain, Poland and South Africa; it also operated in Canada until 2016, and in Germany, Switzerland, Austria and the Netherlands through the German payments business, BillPay, between 2013 to 2017.

The Retail Trust, trading as retailTRUST, is a registered charity based in North London which aims to support those working and retired from the retail industry in the United Kingdom. The charity runs a helpline and several retirement estates in England and Scotland, as well as providing educational bursaries and hardship grants.

Credit unions in the United Kingdom were first established in the 1960s. Credit unions are member-owned financial cooperatives operated for the purpose of promoting thrift, providing credit and other financial services to their members.

London Capital Credit Union Limited is a not-for-profit member-owned financial co-operative, based in Archway and operating in the City of London and north London boroughs of Barnet, Camden, Hackney, Haringey and Islington.

Hornsey (FIA) Co-operative Credit Union Limited was a savings and loans co-operative, established in the Municipal Borough of Hornsey, now part of the London Borough of Haringey, in 1964. One of the earliest credit unions in the United Kingdom, it merged with London Capital Credit Union in 2013.

Rainbow Saver Anglia Credit Union Limited is a not-for-profit member-owned financial co-operative, based in Lowestoft and operating through 18 collection points in the East Anglian counties of Suffolk, Cambridgeshire and certain districts of Norfolk. It was established in 1999 and has 3,500 members.

London Community Credit Union Limited is a member-owned and led financial co-operative, operating in the London boroughs of Hackney, Haringey, Islington, Newham, Tower Hamlets, Waltham Forest and the City of London. It has over 17,000 members and 4 branch offices in Bethnal Green, Poplar, Hackney and Stratford.

National Fire Savers Credit Union Limited is a not-for-profit member-owned financial co-operative, based in the London Borough of Southwark and operating throughout Great Britain. It has assets in excess of £11,000,000.

Commsave Credit Union Limited is a not-for-profit member-owned financial co-operative, based in Northampton in the English Midlands. In 2020, it absorbed Northamptonshire Credit Union. As at 31 March 2021, Commsave has 30,875 members with over £90m worth of savings and £45m on loan to members.

Plane Saver Credit Union is a not-for-profit financial co-operative, with their main office based in Harlington, and a second office at Heathrow Airport. A member of the Association of British Credit Unions Limited, Plane Saver has over 11,500 members, over £45 million in assets, and have lent more than £100 million to date.

London Plus Credit Union British not-for-profit member-owned financial co-operative

London Plus Credit Union Limited is a not-for-profit member-owned financial co-operative, based in Fulham and operating in the City of Westminster and west London boroughs of Hammersmith and Fulham, Kensington and Chelsea, Wandsworth and Hounslow. Wandsworth Plus Credit Union is a trading name of London Plus Credit Union working in partnership with Wandsworth Council in south west London.

East London Credit Union Limited was a not-for-profit member-owned financial co-operative, based in Walthamstow and operating in the east London boroughs of Waltham Forest, Enfield, Haringey, Hackney, Newham, Redbridge and the Epping Forest district of Essex. All members of the credit union were instant savers; different loans were provided depending on individual circumstances.

Thamesbank Credit Union Limited is a not-for-profit member-owned financial co-operative, based in Hayes and operating in the south west London Boroughs of Hounslow, Richmond upon Thames, Wandsworth, Kingston upon Thames and the Spelthorne district in Surrey.

References

  1. ↑ Credit union pilots cheaper "payday" loans, BBC News, 15 May 2013, retrieved 16 October 2013
  2. ↑ O. Sallyanne (Olufemi Sallyanne), Decker; Jones, Paul A. (2007). The development of Southwark Credit Union 1982-2007 (PDF). Liverpool: School of Applied Social and Community Studies, Liverpool John Moores University. p. 9. ISBN   978-0-9553997-4-9. Archived from the original (PDF) on 11 November 2014.CS1 maint: date and year (link)
  3. ↑ Decision details: Provision of credit union services in Lambeth, London Borough of Lambeth, May 2010
  4. ↑ Pimlico merger completed, London Mutual Credit Union, July 2011
  5. ↑ Credit union pilots cheaper "payday" loans, BBC News, 15 May 2013, retrieved 16 October 2013
  6. ↑ Ellie Duncan (12 September 2013), Credit union pilots cheaper "payday" loans, Credit Today, retrieved 14 October 2013
  7. ↑ Ellie Duncan (12 September 2013), Credit union pilots cheaper "payday" loans, Credit Today, retrieved 14 October 2013
  8. ↑ Patrick Collinson (25 July 2013), "Credit unions aim to beat payday lenders at their own game", The Guardian, retrieved 16 October 2013
  9. ↑ Credit unions in membership of ABCUL Archived 3 January 2015 at the Wayback Machine Association of British Credit Unions (retrieved 1 November 2014)
  10. ↑ Credit Union Guide Financial Services Compensation Scheme (retrieved 2 April 2015)
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.