The Duchess of Cornwall gave her enthusiastic support this week to the work of Credit Unions and their role in providing financial services for the most vulnerable.
Thursday was International Day of Credit Unions, with activities across many countries, to recognise the achievements of this distinct kind of institution.
Belonging is at the heart of Credit Unions: customers belong as members and investors, they share ownership and benefits of the fund, as well as a voice in the decisions around it. They are mutually-owned, ethically-run, and locally-based.
In contrast with the recent scandals around PayDay loans used by the most financially and socially vulnerable to tide them over week-on-week. With compound interest of up to 4,000% this left people with impossible debts.
Ethics – and commercial sustainability – have no place in this practice. Under pressure from public and the Financial Conduct Authority (FCA) Wonga recently wrote off £220m of debts for 330,000 customers.
The Credit Unions show us a different model: one in which ethics, commerce and financial services are easy partners.
Shared ownership means shared accountability, creating a powerful sense of belonging.
Purpose is twinned with ethos, giving people principles to believe in and a reason to commit.
Belonging is not just about what you are doing, or how much money you are making: but who you are serving, and why.
Mutual support, strong principles, sharing, exchange and interdependence are all features of this kind of belonging.
Ethics benefits too. When people feel they belong to something they commit more firmly to its principles.
When people belong they do the right thing because they want to, not just because it says so in the rules
The theme of this year’s ICU Day is “Local Service. Global Good”. The World Council of Credit Unions says this “emphasizes credit unions’ positive impact in their communities and around the world”
In the UK there are 524 Credit Unions with £1.1bn worth of assets and almost 1.5 million members, of which the Duchess of Cornwall herself is one.
The Duchess said: “Credit Unions serve people, not profit”and could be “a real force for change in the financial landscape”.
They are growing in popularity in the UK, though just 2% of population are members. Although returns on savings are low, the appeal is in mutual support, with members borrowing and lending through the fund. Gateway Credit Union in South Wales reports significant growth.
In the US, Credit Unions are used by 46% of adult population with strong regional brands.
Mazuma Credit Union, based in Kansas City, exudes the power of belonging. Respected for its great work with the communities it serves as well as a great culture for the people who work within it, it has achieved consistent growth and stability through the recession.
Public faith in financial institutions crashed after a host of ethical disasters. Even the Co-op, the paragon of ‘good business’, is sullied by the scandals around the previous CEO and revelations about failings in Governance.
Are the major financial institutions are too big to be held accountable?Can Credit Unions set high standards of ethics, and help restore confidence in finance houses?
The unique ethos and structure of credit Unions must be welcome to the FCA. In its earnest efforts to improve standards of ethical conduct in financial sectors it stresses.
“Treating customers fairly remains central to our expectations of firms’ conduct, that firms put the well-being of customers at the heart of how they run their businesses.”
Let’s hope that the ethics of Credit Unions, and the spirit of belonging, can imbue shared accountability across the financial sector.
We surely need it.
Do your customers, employees and investors all feel they belong to your organisation?
Does everyone in your business uphold its ethics?
Talk to us about how to create a sense of Belonging.