| When you are on a low income, it is very difficult | | | | requirements Credit Unions now have to meet to |
| to get credit. And yet, most of us could not | | | | safeguard member's money in the same way as |
| manage certain purchases outright, even if we | | | | banks and building societies- Obtain funding & |
| get a decent wage. This is where the Credit Union | | | | sponsorship -and include the figures in your |
| offers a real alternative.Run by a volunteer board | | | | business plan- Choose officers - Officers and |
| of directors which are elected by its members, a | | | | employees of the credit union will need to obtain |
| Credit Union is basically a financial cooperative, | | | | 'Approved Persons Status' from the FSA, and will |
| owned and controlled by its members.They offer | | | | need training for their roles- Think about |
| affordable loans and encourage members to save. | | | | marketing & promotion and how you will meet |
| By law, the maximum a Credit Union can charge | | | | your business plan targets- Launch your credit |
| is 12.7% and this is charged on an ever reducing | | | | union.It is also vital to secure sponsorship from |
| balance, which means that every week or month, | | | | local sources, such as employers, housing |
| you will pay less and less interest. There are no | | | | associations, business groups or councils as setting |
| hidden charges and you will not be penalised for | | | | up your own credit union can initially be an |
| repaying the loan early.Anyone can join a credit | | | | expensive process. ABCUL estimates the costs at |
| union, as long as they are part of the 'common | | | | between £30,000 and £70,000 in |
| bond'. This could be people living in a shared area, | | | | setting up a scheme with premises and staff for |
| working for the same employer or belonging to | | | | the first three years.Credit unions in the UK are |
| the same association.So how do you start your | | | | also required to reach a statutory minimum |
| own credit union?The average time it takes to | | | | reserve of 10 per cent of aggregate assets to |
| establish a credit union is between one and three | | | | protect their members. Until they reach this level, |
| years. The minimum number of members | | | | credit unions should transfer at least 20 per cent |
| required for the initial set up is 21 and the | | | | of their surplus into reserves each year.Covering |
| maximum number of members once you are | | | | you and your membersIn the UK a credit union |
| established is limited to just 5,000 people.After | | | | has to take out insurance to protect its members' |
| you have secured enough members to start your | | | | funds from fraud and mismanagement. However, |
| union, there are a number of tasks which will | | | | there is no industry-wide compensation scheme |
| need to be completed.- Firstly, decide on a | | | | to protect members' savings should a credit union |
| common bond - where your credit union will | | | | become bankrupt.Before you set up your credit |
| operate- Get a group together with the | | | | union from scratch, consider investigating if credit |
| necessary range of skills and experience to | | | | unions in neighbouring areas would be willing to |
| develop a successful community business- Carry | | | | expand their common bond to your locality or |
| out a pledge drive - find out just what demand | | | | place of employment.Many credit unions are |
| there is for a credit union in the area you wish to | | | | expanding their common bonds to cover much |
| service and use the information obtained to | | | | larger populations, and your area may already be |
| inform your business plan projections- Join The | | | | included in someone else's plans. ABCUL can |
| Association of British Credit Unions (ABCUL) as a | | | | advise you on initiatives happening where you are, |
| Study Group member - for just £35 a year, | | | | and put you in touch with the right people.To the |
| you get a full manual and access to all of ABCUL's | | | | wider community, a Credit Union improves the |
| information services- Discuss and research your | | | | general financial knowledge of its member and |
| plans with the regulators - The Financial Services | | | | offers training to its volunteers investing in local |
| Authority (FSA) will need to approve your | | | | money.It helps restore a sense of pride in |
| common bond and satisfy itself that your | | | | disadvantaged and disaffected communities and |
| business plan and policies and procedures meet its | | | | provides a means of targeting financial exclusion. |
| standards. The FSA website gives the regulatory | | | | |