October 2022 digital edition

Credit unions
provide a lifeline
in the cost of living crisis
q The Co-op Bank
has seen a wave of
branch closures
Facing page: Abcul
CEO Robert Kelly
By Paul Gosling
Credit union membership and lending have
increased significantly in response to the cost
of living of crisis. This growth in lending is
despite a rationalisation process that has seen
the closure of weaker unions, leading to a fall in
their total number.
According to Bank of England statistics
published in August, the number of adult
members of UK credit unions has risen to an
all-time high of 1.93 million. But the starkest
increase was in loans to borrowers, which
jumped by 18.9% to £785m last year, in
England alone.
But net liabilities in arrears in England
also increased, to £65.5m – a rise of 9.5% in a
year. Across the UK, the arrears figures were
better, falling slightly. Other positive indicators
included a big increase in government support
for credit unions in Scotland, while credit union
assets rose by 7% in Northern Ireland and by
9.5% in Wales.
These figures were welcomed by Abcul,
the Association of British Credit Unions Ltd.
“Credit unions are building financial resilience
in households and communities all across the
country and helping consumers manage their
finances in a hugely positive way,” says its
CEO, Robert Kelly. He adds: “Credit unions will
continue to serve communities and employers
in these testing times through the provision of
ethical and responsible products and services
– our mantra of people helping people will
continue to be the bedrock of everything we do.”
The Irish League of Credit Unions, which
has 85 member unions in Northern Ireland,
says it is too early to observe the impact of the
financial crisis in the most recent statistics from
June this year. “Those figures do not show any
significant increases in membership,” says a
spokeswoman, “however, it’s worth noting that
membership in Northern Ireland is much higher
than the rest of the UK, with more than a third of
adults (536,000) holding an account with their
local credit union.”
The League’s affiliated unions in Northern
Ireland hold assets of over £1.83bn, of which over
£582m is out on loan. The member unions “are
extremely well positioned to deal with increased
demand for loans as a result of the cost of living
crisis,” says the ILCU spokeswoman.
She adds that member unions provide a range
of financial and practical support to members.
“Credit unions will continue to do what they
always have, which is to prioritise the needs of
their members. At this time, with a recession
forecast, and households facing soaring costs
for utilities, groceries and fuel, credit unions
will do everything they can to support members
struggling. Whether that is through providing
access to affordable credit, or working with
individual borrowers struggling to manage their
repayments.
“What we are seeing currently is a smaller
growth in savings, which is likely to be a
combination of members using their savings, or
indeed having less to save.
“Demand for loans has also risen, with an
annual growth of 7.7% (June 21 – June 22).
Anecdotally, we understand there to be a shift
36 | OCTOBER 2022