Developing new national partnership approaches between Credit Unions and Social Housing Providers

CfRC Conference 2013Gareth EvansAssociate Research Manager

Socio-economic /policy challenges:• Difficult times for both social landlords and their residents. • residents are already shown to be significantly more likely to be

financially excluded • looks set to deteriorate even further in the face of on-going

adverse economic conditions. • Wholesale welfare reform will have major consequences:• Reduced household incomes as claimants receive less overall

welfare benefits.• Wholesale changes to the way benefit payments are received

requiring significant adjustment to household budget management

• Knock-on effect for landlords, with increasing rent arrears, resulting in rising numbers of evictions as well as increasing costs and impact on the attitude and costs of lenders to the sector

Existing arrangements with CUs:• Financial inclusion is a key focus for ASG (and work with CUs

important part) – resident and group benefits• Operates in over 101 local authorities, making take-up

amongst residents even more difficult and the management of support, promotion and access more demanding.

• Currently works closely with over 20 different credit unions (out of 57 working in ASG areas) - differing standards of service, financial stability and product and service delivery, together with differing success.

• No picture of the actual number of ASG residents who are members – even amongst existing partners.

Legislative change for CUs:• Legislative Reform Order removes restrictions that will help

make credit union services available to many more people and will allow them to:• reach out to new groups by serving more than one group of

people• provide services to community groups, businesses and social

enterprises• offer interest on savings, instead of a dividend.• Removing restrictions on non-qualifying members• Offers social housing providers chance to work

collaboratively with either a single or a selected number of credit unions to provide unilateral coverage for their tenants (and staff).

FIC Evaluating the Options:

• FIC has been working with ASG over last year to evaluate the most beneficial and viable approach:• Stage 1 - Research the various options for ASG working in

partnership with credit unions:• Do nothing – retain individual CU partnership• Alternative provider model• ASG own CU• Multiple regional credit union model• Single national credit union model

• Stage 2 - Determined how it can be practically delivered and the required resources.

• Involved consultation with ASG staff and residents, as well as some leading CUs.

1Credit Union Project:ASG has determined that a national approach with a single credit union is most suitable. as:•Allowing the strongest and most appropriate CU to be selected against the key financial needs of residents.•Providing the ability to offer a universal range of financial products delivered remotely by telephone and online, as well as through their existing service infrastructure.•Enabling every resident to open a transactional bank account for benefit receipt and rent payments.•Ensuring standardised quality and level of service across the associations.•Focusing all resources and efforts on promoting a single service thus maximising uptake and increasing innovation and collaborative opportunities.

1Credit Union Project:• Enable monitoring of the number of residents benefiting from

the credit union services and measurement of impact.• Being simpler for staff to understand, promote and refer and

could effectively link with internal processes and procedures.• Not presenting undue barriers to access or usage as the

majority of leading credit unions already have the infrastructure and delivery mechanisms required to deliver remotely

• Allowing residents the choice of still joining their local credit union for convenience or face-to-face access, where local partnership are effective.

Commenced a tender process to select a single credit union that can deliver holistic, universal, consistent and comprehensive services to all ASG resident residents.

Tender process:Commenced a tender process to select a single credit union that can deliver holistic, universal, consistent and comprehensive services to all ASG resident residents:•Partnership agreement and timeframes: To commence from 01 April 2013 for an initial three years. •Organisational strength: Work with just one strong and financially fit credit union that can demonstrate its stability, financial compliance and movement towards sustainability. •Products and services: Offer a comprehensive range of both essential and desirable financial products and services to be available from the outset of operation.•Service Delivery: Establish suitable delivery methods and infrastructure that would enable remote service delivery/operations across the entire ASG area (including comprehensive online and telephone technologies).

Tender process:• Governance: As well as ensuring good governance practices, the

credit union will need to demonstrate that every resident would be able to potentially participate in its governance and democracy.

• Branding: The ability to appeal to all residents which may require the ASG services to be branded separately by the partner CU.

• Working together: A clear demonstrable willingness to work proactively and innovatively together to achieve a mutually beneficial partnership that is sector leading.

• Performance: Aspirations of maximising take-up by ASG residents and staff that will require appropriate partnership performance targets to be established and reported.

• Resources: A maximum of £150,000 of funding over the three years together with a range of in-kind resources/support that has been identified by ASG to enable and support this work.

Gareth Evans Associate Research Manager

Financial Inclusion Centre E: gareth.evans@inclusioncentre.org.uk W: www.inclusioncentre.org.uk