Credit unions and advice agencies working together Paul A Jones PhD Research Unit for Financial Inclusion Liverpool John Moores University

Two past projects The Connect Project (circa 2010) An ABCUL / Citizens Advice project Developing sustainable working relationships between CABs and credit unions Supported multiple projects throughout the country Funded by Barclays Linking credit unions and money advice (2007-2008) Blackfriars Advice Centre/Southwark Credit Union Ltd/Twinpier Debt Management Agency Funded by Barclays and Friends Provident Foundation

BAC / SCU / TDMA Linking up money advice and credit union services To tackle over-indebtedness and financial exclusion A strategic and innovative development A 12-month pilot project – based on mutual referrals A part-time SCU debt support worker SCU outreach sessions at BAC SCU designated appointments at BAC Capacity for SCU referrals to Twinpier Access to credit union membership for BAC clients

CU referrals to Advice Agency Issues that arose for Advice agencies Credit union knowing when to refer Credit union making appropriate referrals Need for a filter system Not every financial problem is a referral Need for preparation and support Efficiency and professionalism Ongoing communication with the credit union

Advice agency referrals to CU Differing approaches among advisers Very cautious to proactive encouragement Adviser concerns Financial promotions legislation Agency independence Borrowing to get out of debt Current, savings and loan accounts in one organisation

Advice agency referrals to CU Some credit union concerns about Advice agency referrals Supporting unrealistic client expectations A lack of assessment of risk – not all clients can be granted a loan Responsibility for loan decision must be the credit union’s Understanding the nature of the credit union business Managing loan default (when the client returns to the CAB)

Learning from the project Seemingly common vision and purpose Could mask important differences Assumptions, beliefs, perspectives and interests vary Differing expectations and concerns Need for mutual recognition and acceptance between agencies In the context of collaborative working Success depended on: getting the dynamics of the relationship right external funding and support linking up with money guidance and financial capability education Building upon strategic and holistic approach

Further learning points from the project Advice agency capacity And credit union access to preferential appointments Credit union administration Embedding the debt support function Not just debt advice and affordable loans Income maximisation Focus on range of CU products and services Savings, current accounts, insurance Necessity of a strategic focus and acknowledgement of contested issues Commitment of board or trustees Engagement of staff

ABCUL / Citizens Advice Connect One example of project working (from Connect literature) “Worksop Credit Union and Bassetlaw CAB. The two organisations have been working closely together since before the start of the Connect project and were used as one of the examples of good partnership working at the start of the project. The managers of both organisations are on the other’s Board. They have introduced a system of fast referrals and are currently looking at developing shared services”. Worksop Credit Union now 2 Shires Credit Union Ltd

Shattering the myths (Connect) The CAB “side of the story” provides the truth behind the myths: The trigger figures are just made up The trigger figures allow whatever the customer wants I heard of someone that was allowed £70 per month just for their mobile Apparently Sky TV can be seen as a “need to have” The credit union “side of the story” provides the truth behind the myths: Credit union loan rates are always set at 26.8% Credit unions are all the same Credit unions treat members in arrears unfairly Credit unions are just like banks