Southwark Credit Union

We have introduced the CreditUnion Social Responsibility (CSR) initiatives as part of our Code of Governance programme in January 2008.

We believe access to basic financial education and services is essential to building economic self-reliance.

By introducing unique products and services and working in partnership with Central & Local Governments and community organisations, we support our members to gain access to the financial services that they need.

. Background

Established in 1982 to provide Credit Union services to employees of the London Borough of Southwark It has merged with 4 of the local Credit Unions. Now it is the only Credit Union in Southwark and Lambeth, with four dedicated offices where members could access the services.

As a full-service financial institution, London Mutual Credit Union (LMCU)is the largest live or work Credit Union in London, with over £8.6 million in assets, and over 9,500 member-owners. LMCU has 32 professional and knowledgeable employees, and is comprised of four branches and a head office in Camberwell, London. LMCU has been meeting the needs of the individuals throughout Southwark for twenty eight years.

The credit union, like banks and building societies, is regulated and supervised by the Financial Services Authority (FSA). Savers' deposits are protected by the same Financial Services Compensation Scheme that covers banks and building societies.

. History

Credit Union started in Germany. From early times people have co-operated for their mutual advantage. The modern Credit Union Movement traces its origins to Germany and to Friedrich Wilhelm Raiffeisen, the Mayor of a small town in Southern Germany, who in 1849 formed Societies, which later evolved into credit unions, for the purpose of assisting people to help themselves out of debt and poverty. Raiffeisen laid down these conditions, which he considered necessary for the success of the organisation:

* Only members could save or borrow

* Loans were made for provident or productive purposes at rates of interest members could afford

* The character of the member would be the most important security for his/her loan

* The member would own, control and administer the Society - the credit union

These conditions are still the basis of the modern credit union in Great Britain. The Movement spread through the rest of the continent of Europe and to India.

Credit unions have been providing cooperative financial services for more than 150 years. The credit union idea developed in Germany in the 1840s and spread to North America at the beginning of this century. St. Mary's Bank, the first credit union in the United States, was organized in 1908 in New Hampshire. The history of the Credit Union movement demonstrates the principle of "People Helping People to Help Themselves" in action.
History of the Credit Union Movement
This is the story of an idea. A simple idea: that people could pool their money and make loans to each other.

It's the credit union idea and it evolved from the cooperative activities of early 19th century Europe. The first of these cooperatives was an 1844 marketing co-operative organized by a group of workers in Rochdale, England. That same year in Germany, Victor Aime Huber began developing and publicizing some of the early European cooperative theories. The idea of credit societies was a part of this effort.

Credit Societies: 1852-1864

Two men, Hermann Schulze-Delitzsch and Friedrich Wilhelm Raiffeisen, were responsible for creating the first true credit unions in Germany in 1852 and 1864. During 1849, Raiffeisen founded a credit society in Flammersfeld, Germany, but it depended on the charity of wealthy men for its support. Raiffeisen remained committed to that concept until 1864, when he organized a new credit union along principles still fundamental today.

The credit societies in Germany, and similar institutions founded by Luigi Luzzatti in Italy, were the forerunners of the large cooperative "banks" that abound in Europe today.

In 1871, credit union legislation was considered in Massachusetts. This attempt and later efforts in the 19th century to start U.S. credit unions were not very successful.

Guiding Principles

The idea, however, continued to grow. It was a very simple idea: (1) Only people who were credit union members should borrow there; (2) loans would be made for "prudent and productive" purposes; (3) a person's desire to repay (character) would be considered more important than the ability (income) to repay. They were, after all, borrowing their own money and that of their friends. These principles still govern most of the credit unions in the world.

The Idea Goes West

It was a Canadian who transplanted the credit union to the Western Hemisphere. In 1900, Alphonse Desjardins organized a credit union (caisse populaire) in Levis, Quebec. The reasons were the same as those in Germany 50 years before. People were poor, interest rates were financially crippling, and the credit union offered a way out.

That first Canadian credit union was small by modern standards. The first savings deposit was only 10 cents; the first collection from all the members totaled only $26. Even today, in some countries, credit unions start small.

But Desjardins persevered and devoted a good part of his life to credit union development in North America. He founded other credit unions, including the first one in the United States, in 1909 in New Hampshire.

Jay, Filene - The U.S. Overture

Two Americans became profoundly influenced by Desjardins' efforts: Pierre Jay, the Massachusetts banking commissioner and Edward A. Filene, a Boston merchant.

Filene discovered credit unions in a village in India in 1907. He had stopped in Calcutta and met a government official who took Filene out into the countryside. There Filene first observed a village credit union in operation and was immediately interested. Back home again, he began reading about credit unions to strengthen his knowledge.

Filene was perhaps the ideal American to give the credit union idea a push. He was a progressive thinker for his time. He had begun profit-sharing plans for his employees, instituted other novel fringe benefit programs, was the founder of the "bargain basement" idea in department store operation, allowed his employees to engage in collective bargaining and arbitration, established minimum wages for female workers, and advocated a five-day, 40-hour week. In the early 1900s, such ideas were revolutionary. Besides his creative approach to business, Filene was also one of the founders of the U.S. Chamber of Commerce.

As banking commissioner, Pierre Jay had made a study of unauthorized banking practices in Massachusetts. He learned that several groups of employees in the commonwealth had started their own savings and loan organizations. These groups resembled what Henry Wolff, a European, had described as "people's banks." Jay believed that these small associations were providing a needed service, but he wanted to recommend a way to make them legal.

From Wolff's writings, Jay turned to the work of Desjardins and others. He began a chain of correspondence with Desjardins. This resulted in a 1908 conference in Boston in which Desjardins, Jay, Filene and other public-spirited citizens participated. Working with Desjardins, Jay prepared the legislation for what was to become the first general state credit union act in the United States.

Established in 1982 to provide Credit Union services to employees of the London Borough of Southwark, our Credit Union has expanded rapidly during the past five years. It has merged with 3 of the local Credit Unions. Now it is the only Credit Union in Southwark, with three dedicated offices where members could access the services.

Getting It Together

Public hearings was held on the credit union legislation in Massachusetts. Most of the testimony at first came from Desjardins. His comments had a major impact. Then Filene came into the picture. His testimony helped clinch passage of the first general state credit union act in 1909.

However, the next decade saw no great explosion of credit unions, despite continuing efforts. Fewer than 10 states passed credit union laws, many of which proved unworkable; the Massachusetts Credit Union Association, the first of its kind, grew slowly.

Waking Up the Nation

In 1921, Filene decided that the only way to get credit unions off the ground was to seek federal legislation and increased state legislation. He created the Credit Union National Extension Bureau and hired a Massachusetts attorney, Roy F. Bergengren, to help him.

Bergengren and the Bureau were charged with seeking effective credit union laws in all states and at the federal level. They hoped to create a nationwide association of credit unions to provide leadership and services to existing credit unions, and to organize new credit unions. During this period, the credit union was seen as a small, tightly knit membership institution.

Bergengren, the Organizer

When Roy Bergengren began his efforts, there were only 199 U.S. credit unions, but during the next 13 years (until 1934), the credit union movement grew dramatically.

Filene poured more than $1 million of his own money into the project. The Bureau began to lobby across the country. Bergengren appeared before state legislators, laws were passed, and volunteer organizers were initiated into the "movement." By 1925, 15 states had passed credit union laws; 419 credit unions were serving 108,000 members. By 1935, 39 states had credit union laws and 3,372 credit unions were serving 641,800 members.

The Credit Union National Association (CUNA) is Created

In 1934, the credit union idea spread so fast that credit unions and leagues recognized the need for a national organization. At a meeting at Estes Park, Colorado, the Credit Union National Association (CUNA) was formed as a confederation of state leagues. CUNA replaced the Credit Union National Extension Bureau and Roy Bergengren became CUNA's first managing director.

In the same year, Congress finally passed a federal credit union act, which permitted credit unions to be organized anywhere in the United States. The passage of this landmark legislation created a choice for credit unions. They could incorporate under either state or federal law. This system of dual chartering persists to the present day.

Almost immediately after its organization, CUNA recognized a need for credit-union-oriented insurance services and standardized office supplies.

In 1935, CUNA formed the CUNA Mutual Insurance Society. Declaring, "The Debt Shall Die With The Debtor," CUNA Mutual developed a Loan Protection Insurance policy followed shortly by Share Life Insurance. These programs provide for specified compensation to the beneficiaries of deceased or disabled credit union members.

Begun with a $25,000 loan from Filene, CUNA Mutual had receipts of only $145 during its first month of operation. Three months later, it was faced with its first claim, for $40, and had to borrow money to pay it.

Today, the CUNA Mutual Group is one of the largest insurance companies in North America in terms of insurance in force and writes more credit life insurance than any other company in the world.

The second growth move by CUNA was the formation of CUNA Supply Cooperative in 1936. CUNA Supply was designed to supply forms and other materials to credit unions. Starting with only three employees in a basement shop, CUNA Supply is now part of CUNA Service Group, which provides more than $22 million in products and services to credit unions each year.

. The League

The Growth of Credit Union Leagues
During the formative years of the credit union movement, credit unions quickly discovered that they could expand faster and provide better service if they banded together into leagues on a state-wide basis. Leagues provided financial and legal advice, organizing know-how, and an instrument for credit unions to use in seeking favorable state legislation. But something more was still needed.

The Credit Union National Association (CUNA) is Created

Almost immediately after its organization, CUNA recognized a need for credit-union-oriented insurance services and standardized office supplies.

Today, the CUNA Mutual Group is one of the largest insurance companies in North America in terms of insurance in force and writes more credit life insurance than any other company in the world.

The War Years and After

World War II halted progress of the U.S. credit union movement, just as it did many other sectors of the economy.

With the end of the war came renewed credit union growth in the United States. In 1945, there were 8,683 credit unions in the country; by 1955, there were 16,201; and by 1969, the U.S. movement reached its peak of 23,876 credit unions.

Since then, the number of credit unions has declined, as many smaller credit unions have merged into larger ones that usually offer more services.

Membership, however, has continued to climb. The number of credit union members doubled during the 1970s to more than 43 million by the end of the decade. Today, some 67.4 million Americans are credit union members.

In Canada, organization of new credit unions has also tapered off since the 1960s, reflecting a trend toward fewer, larger organizations. Membership in Canada now totals close to 4.5 million.

.The Credit Union System

The Credit Union System, which includes credit unions, and state and national credit union organizations, is one of the strongest financial networks in the world.

Through this cooperative effort, credit unions of all sizes are able to offer their members a broad range of sophisticated financial services. They can combine their individual strength with other system components to coordinate their marketing, upgrade their management and technical skills, and speak with one powerful voice in Washington, D.C.

On the national level, CUNA and Affiliates provides credit unions with the products, services, and leadership needed to compete in today's financial marketplace. These products and services are available to credit unions through league affiliation, and dues and fees support.

Commitment to Consumers

Together, the Credit Union System is one of the largest and strongest financial organizations in the nation. Credit unions, leagues, CUNA and Affiliates, CUNA Mutual, the World Council, and the many other credit union support organizations work together to meet member needs.

The credit union idea has grown to many millions of people, but there is literally no limit to what the movement can achieve in terms of growth, service and most important, as an instrument of cooperation and harmony between people everywhere.

. A Global Affair

In 1954, CUNA established an international services department (World Extension) to extend its reach beyond North America. There was, as yet, no central worldwide organization of credit unions.

This changed in May, 1964, when CUNA revised its charter to become CUNA International, taking under its wing credit unions and associations in Canada, Latin America, and elsewhere. But events called for the creation of an independent, worldwide organization for credit unions.

World Council Is Born

The rapid growth of credit unions in other parts of the world and in emerging nations led to the creation in 1970 of the World Council of Credit Unions. CUNA once again became a national organization and joined confederations in Canada, Africa, Asia, Australia, Latin America, and the Caribbean as members of the World Council.
National and regional confederations concentrate on development and guidance of credit unions in their areas; the World Council emphasizes overall progress and continuing unity of the worldwide movement.

Growth and Challenge The spectacular growth of credit unions in the United States in the past decade has made them an important part of the nation's financial system. But this new status has also increased the competitive pressure as other financial institutions have sought to offer more consumer services.

The role of CUNA and Affiliates and the state leagues is to protect the gains credit unions have made and to prepare them to operate in the new financial world of the future without losing their commitment to the unique credit union tradition of service to people.

. Britain

You have got lots of choices in financial institutions. What's the best option for you and your family? When you compare, you'll see the benefits of joining a credit union are quite clear.

Banks and some Building Societies are financial institutions that accept deposits and make loans. They are in business to make a profit. They are chartered, or given permission to do business, by the state or federal government. They are owned by groups of stockholders whose interests include earning a healthy return on their investments.

There are about 700 Credit Unions in the UK and at least one new Credit Union registering every month.

A credit union is a group of people who save together and lend to each other at a reasonable rate of interest.

For the past decade people in Great Britain have achieved a better way of life through their participation in their credit unions. They do this by forming a credit union or by joining an existing one.

Today, thousands of members enjoy the benefits of credit union by saving together and being able to borrow at a reasonable rate of interest when the need arises.

The Credit Union Movement is strictly non-sectarian and non-political.

The Association of British Credit Unions Limited (ABCUL)

The Association of British Credit Unions Limited is the representative body for credit unions and provides a wide range of support services for all affiliated credit unions.

A Board of Directors elected at its Annual General Meeting by delegates from affiliated credit unions directs the Association. A delegate who has one vote may represent each credit union.

Chapter

The Association organises convenient groupings of credit unions, which are known as Chapters.

Each credit union is allocated to a local Chapter of credit unions. Chapter supports the role of the Association and provides an opportunity for the exchange of information among credit union personnel. Most Chapters meet on a regular basis.

Reasons for credit unions

The main reasons why people come together to form or join credit unions are:
· To encourage thrift by helping themselves save on a regular basis thereby building up a fund of money for their own
· Benefit and that of other members
· To create a source of credit for the benefit of members at a fair and reasonable rate of interest
· To help members use their resources to the best advantage
· To promote the welfare of the community.

Self-Help

In Britain there has been a long tradition of co-operative self-help exemplified by numerous voluntary organisations and friendly societies.

The modern Credit Union Movement shows that by working together people can achieve far more through co-operation than by individual effort.

Any group of people sharing a 'common bond' can form a credit union. Every eligible person has the right to join an existing credit union.

Credit unions put people first

Credit unions have been very successful in helping people gain a greater measure of control over their personal finances. They are an effective means of teaching the value of voluntary action and community development. The members are the credit union. They provide services to themselves.

· The members own and control the credit union
· The credit union deals only with its members
· The members decide on the distribution of surpluses
· The credit union management is of a voluntary nature