Lesley Bostock - "The Bolton Credit Union"

This is the text of a talk given by Lesley Bostock of Bolton MBC about the establishment of a Bolton-wide Credit Union at the Branch meeting on 4th February 2004.

Graham introduced Lesley who spoke about work to establish a Bolton-wide Credit Union. She explained that Credit Unions are non-profit, non-charity organisations in existence to serve the community. Each is owned and run by its members and has the following objectives:

   The promotion of thrift among members by accumulation of their savings.
   The creation of credit for the benefit of members at a fair and reasonable rate of interest.
   The use and control of members' savings for their mutual benefit.
   The training and education of the members in the wise use of money and the management of their financial affairs.

Membership will be open to anyone who lives or works in Bolton, there will be a one off membership fee (about £3.00) and no hidden extras or charges. The Credit Union will be owned and run by its members and profits will be shared out amongst them.

The Credit Union is an easy way to save with members being able to put away as little or as much as they can afford. Payment can be by payroll deduction and can help members with budgeting, savings plans, Christmas and holiday expenditure, etc.

It's also a cheap way to borrow, especially for small amounts. The interest rate is 1% per month on reducing balances and there are no penalties for early repayment. Examples were given:

Amount	Term	Weekly	Total	Interest
£100	12 months	£2.04	£106.56	£6.56
£500	12 months	£10.25	£533.00	£33.00
£1,000	12 months	£20.51	£1,066.32	£66.32

In addition the scheme provides for doubling the members' shares and cancellation of the loan on death and protection of savings should anything go wrong with the scheme.

Lesley finished by explaining that the Credit Union is being set up with financial and other assistance from East Bolton Regeneration Fund, European Regional Development Fund, Bolton European Funding Partnership, Bolton MBC and Bolton at Home.

In response to a question Lesley said that members don't get interest on their savings but are entered into a free draw and also get an annual dividend. The Leeds Credit Union paid a 5.5% dividend last year.

John asked about the two existing Credit Unions in Bolton, at Johnson Fold and Breightmet. Lesley said that she hoped that they would become part of the new set up and members from those organisations are on the organising committee of the new one. The two existing Credit Unions are quite small (Johnson Fold has about 100 members) but changes in Treasury rules will enable larger ones to become established. In Ireland and the USA Credit Unions are very much a way of life.

Lesley was asked about links between the Citizens' Advice Bureau and the new Credit Union. She said that people from the CAB are involved in setting it up, that the premises will probably be adjacent and that the CAB will refer people with financial problems to it.

Graham asked about support from the funding organisations and Lesley said that they will provide money for funding paid staff, promotion, equipment, premises, etc. Eventually the Credit Union will be self funding.

Alan asked whose idea it was to set up the Credit Union. Lesley replied that it has come out of the Bolton Community Finance Partnership. Its interim board consists of 15 members from various local organisations including Bolton MBC, Councillors, CAB members and two each from Johnson Fold and Breightmet Credit Unions.

John asked when it would be operational. In reply, Lesley said that the business plan will be submitted by the end of February. It'll take about three months to be approved and the premises have to be modified. Therefore it'll be the middle of the year before it is "open for business". The Credit Union will lodge the members' funds with a recognised institution, probably the Cooperative Bank.

Sheila was concerned that some people won't trust the Credit Union. Lesley said that it will be regulated by the FSA and the offices in the town centre and elsewhere will only act as a point for deposit of money and withdrawal of small amounts. Safety and security is the most important consideration in such a venture.

She added that they currently have 1,500 pledges from people interested in being members and will need about 1,600 actually saving for it to be viable.

Graham said that the banks invest their money in all sorts of dubious enterprises and activities to pay out interest to customers. Lesley pointed out that the Credit Union only earns money from the interest paid by members on the loans that it makes. In a way it will be like the very early building societies.

Lesley was sincerely thanked for her presentation and the meeting continued.

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