Oxfordshire Credit Union
- Meeting of Finance Panel (Panel of the Scrutiny Committee), Thursday 7 April 2016 5.30 pm (Item 4.)
- View the background to item 4.
Oxfordshire Credit Union is one of two credit unions operating in the city, the other being Blackbird Leys Credit Union. The Council has previously provided funding to both credit unions to support their development and to facilitate a potential amalgamation. In 2015 the City Council commissioned an evaluation of credit union services in Oxford following the breakdown of the merger discussions.
Why is it on the agenda?
To consider the role of Oxfordshire Credit Union and the support provided by the City Council in light of regulatory changes.
Who has been invited to comment?
Mark Luntley – Chair, Oxfordshire Credit Union
TBC - Oxfordshire Credit Union
TBC – Blackbird Leys Credit Union
Mark Luntley, Chair of Oxfordshire Credit Union (OCU), introduced the work of OCU. He said that OCU had been going for ten years and had £0.5m in savings, £250k out in loans and 800 active members. This represented a 10% increase in membership over the last six months and had been achieved by working with local employers.
It could be assumed from national figures that there were approximately 2000 people in Oxford with pay day loans and that some £1.7m was taken out of the local economy in interest payments on these loans.
A proposed merger with Blackbird Leys Credit Union had not taken place because, while OCU were happy with BLCU running a volunteer based office if demand was there, an office-based cash-based model was not considered to be practically or financially viable for OCU. OCU had found that cash cards were popular with its members and they had received only seven visitors in a six month period as opposed to 700 telephone contacts.
Mark Luntley said that the ‘Evaluation of Credit Union Services in Oxford’ report that had been commissioned by the Council was an excellent report and that OCU had implemented or was in the process of implementing all 12 recommendations. The report also made 21 recommendations to the Council. Of these, there were four things that the Council could do to support OCU that would be of most benefit in terms of addressing financial exclusion in the city. These were promoting OCU to council staff, promoting OCU to council tenants, providing a tapering grant to OCU until it is fully viable and providing a subordinated loan to build OCU’s capital reserves.
In response to a question about promoting OCU to council staff, the Panel heard that the Council already had a pay in advance scheme (which had low take up) but that some staff may not wish to make their employer aware that they were in financial difficulty. OCU provided a different scheme which required borrowers to save and would over time steer them out of debt. OCU had agreed with other employers not to promote the higher interest rate short-term loans that they had started to offer, within very tight constraints, following a recommendation in the evaluation report.
The Panel heard that OCU had not yet asked the Council for a subordinated loan but several other local authorities had provided loans to credit unions and any loan would be paid back with interest.
In discussion the Panel observed that:
- The Council did not appear to have provided a response to the recommendations made to the Council in the evaluation report.
- Clarity was needed as to whether the Council’s Treasury Management Strategy would preclude it from providing a subordinated loan to a credit union.
- There may be an opportunity for the Council to do more to integrate Discretionary Housing Payments with credit union services.
The Panel AGREED to:
- Request a written report setting out the Council’s response to the recommendations made to the Council in the evaluation report.
- Invite the two credit unions operating in the city to a future meeting at which the written report would be consider, at which point the Panel may wish to agree one or more recommendations to put to the City Executive Board.
- Oxford City Council - Evaluation of Credit Unions in Oxford - Report (Final Version V1 4)amended, item 4. PDF 559 KB View as HTML (4./1) 750 KB