Credit Unions are all about the economic empowerment of their members both by encouraging savings and by providing access to affordable credit. These two activities help our members built financial resilience and reduce the chances of being overwhelmed by unaffordable debt. These activities are enshrined in the objects of the 1979 Credit Union Act, with the primary object being “the promotion of thrift though the accumulation of savings”. (Thrift according to my dictionary app, is “wise economy in the management of money”.)
The promotion of savings is what credit unions are all about. Encouraging people to build up savings provides them not only with financial security and stability but also a platform on which to build their life. Naturally there is always a focus on promoting savings in order to prevent disaster (StepChange Debt Charity note that 20% of people do not have enough savings to last a month if their income dropped by 25%!) but having savings is also about the good things in life: it puts you in control: it allows you spend money without having to get into debt and gives you the time and space to make financial decisions, which means you are less likely to end up in a bad deal.
Given that, I find it disheartening that many Credit Unions are placing restrictions on what their members are allowed to save. Sure, Credit Unions are awash with cash; the amount of savings held to loans issued is out of kilter. That puts pressure on the “bottom line” and hence dilutes dividends, but Credit Unions should be about more than the “bottom line”.
Members saving is a good thing: end of!
Our job is to manage that money in order to generate a dividend return. Don’t get me wrong, that’s a very hard thing to do in this economic climate (especially when we don’t want to encourage unaffordable debt) but that is our job and, unless compelled to do so, Scotwest will continue to encourage all our members to save because that is in their best interest.
Speaking of StepChange (which I was), I have just been appointed to serve as a Trustee with the charity. This service will form part of Scotwest’s on-going commitment to promoting the financial well-being of the society and I am very excited about this opportunity. StepChange’s mission is to realise a society which is free from problem debt and Scotwest will play its part in supporting that.
Kenny MacLeod, CEO