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London Capital Credit Union

Social performance

The credit union is a democratically owned and controlled co-operative, run by and for its members. Its primary objective is to encourage people to save for the future, as a way of avoiding the risks of excessive borrowing.

At times when members need to borrow, or when they are struggling to meet the high cost of existing borrowing, the credit union offers low cost ‘Saver Loans’ that reduce the cost of borrowing to manageable levels. They also provide guidance and support with budgeting and dealing with debt, and over time members move from being borrowers to being savers, greatly improving family finances.

Key Social Performance Indicators (KSPIs)

KSPIs are a measure of how the business is performing on delivering its main social or environmental purpose. Read more

KSPI 1 - Responsible Money Management

"I was taking out payday loans as an only source of borrowing money due to my bad credit history, but the credit union has helped get me out of the cycle of extremely high interest payments."

London Capital Credit Union (LCCU) strives to design its services and products to meet the needs of all people, regardless of their background. Their services continue to be of greatest help to those most often excluded from mainstream financial services. These are typically lone parents, people with long term health issues, having been made redundant, or having gone through a personal crisis such as divorce/separation.

A number of years ago, three financial analysts from a leading City banking institution made an assessment of the social and financial impact of London Capital Credit Union's lending business. They researched all of their first-time borrowers over the preceding three months, and analysed where they had previously been borrowing and at what cost. From this they were then able to determine that for every £1 a member saves, and that LCCU then lends to displace existing high cost debt, members will save on average £1.25 each year in interests, bank charges and fees.

During 2017-18 LCCU used member's savings to issue loans to the value of £7,057,000 to members. Based on the above formula they are estimated to have saved over £8,821,000 in interest by transferring high cost debts to the credit union. Over the next 5 years LCCU forecasts a financial benefit from its activities to members, and the wider community, in excess of £129 million.

Relationship Between Poverty and Debt

  • People in poverty in 2000 tended to have debts relative to their incomes 20% to 25% higher than the population as a whole.
  • Borrowing by poorer people can be justified by the fact that for most households of working age, poverty is only temporary. 35% of households in the sample were in poverty in at least one year between 1991 and 2002 but only 2.5% of households were in poverty for ten years or more.

Source; Joseph Rowntree Foundation - Report on Long Term Relationship Between Poverty and Debt

UK Personal Debt Statistics - January 2018

  • County Court Judgements: 1,756 consumer County Court Judgements (CCJs) are issued every day, with an average value of £1,472.
  • Average Borrowing: The average total debt per household – including mortgages – was £57,578 in November. That’s an average debt per adult of £30,253 – which is about 113.8% of average earnings.
  • Consumer Credit Levels: Outstanding consumer credit lending was £205.8 billion at the end of November 2017. This is up from £192.19 billion at the end of November 2016, and is an increase of £259.24 for every adult in UK. This means average consumer credit borrowing per UK adult is now £3,719.
  • Credit Card Borrowing: Total credit card debt in November 2017 was £70 billion. This is an average of £2,574 per household. This means at the average credit card interest rate it would take 26 years and 3 months to repay if you made the minimum repayments each month.
  • According to the Office for Budget Responsibility’s November 2017 forecast, household debt is predicted to reach £2.296 trillion in q1 2022. This makes the average household debt £84,412.
  • Number of Personal Insolvencies: 277 people a day are declared insolvent or bankrupt. This is equivalent to one person every 5 minutes and 12 seconds.

Source: The Money Charity: Statistics January 2018

KSPI 2 - Membership

A credit union is a not-for-profit financial co-operative owned and controlled by its members, and run for their mutual benefit. Credit unions usually offer a relatively simple set of savings and loans products: the latter generally at very modest rates of interest. Because credit unions are not-for-profit organisations and tend to have a low cost-base, they are generally able to offer loans at a significant discount compared to their competitors.

LCCU conducts an annual survey of its membership, with a 15% response rate. Nearly 30% said they were lone parents, only 60% were in full time permanent employment, and the large majority describe themselves as something other than ‘White British’. The most startling figure shows 25% of members saying that they have less than £15,000 total income to their household and 62% of members are in homes where the total household income is less than £30,000.

KSPI 3 - Customer Service and Responsible Business

During 2018 LCCU undertook an annual survey and asked members how they rated the business for customer service. Over 15% of members responded to the questionnaire, and of particular note was that 50% of those responding said that they had no savings at all before they joined the credit union.

As in previous years, the survey shows a high overall level of member satisfaction with the services LCCU provides, with an average score of 8.5 out of a possible 10.

London Living Wage Campaign

LCCU is proud to be an accredited London Living Wage employer and an early adopter of this important initiative. Far too many working people struggle to make ends meet, yet most people agree that work should be the best way out of poverty. This is why the Credit Union supports The Living Wage Campaign which was launched in 2001. The real Living Wage is an example of communities, businesses, campaigners and faith groups coming together to find practical ways to address working poverty and strengthen families.

Personal Loans Fairlife Mark

The FairLife Personal Loan Mark was created to ensure that loans are well designed in the interest of the consumer. The mark is focused on helping customers to manage and repay their debts, promoting a competitive loan market and protecting customers who find themselves in financial difficulties. LCCU are pleased and proud to have been granted permission to use this important quality mark by the FairLife Charity.

FairBanking Mark - Five Star Award

The FairBanking Foundation charity first awarded London Capital Credit Union its five-star mark for its ‘Saver Loan’ and ‘Instant Saver Loan’ products in 2015. LCCU is proud that the fairness of its products and services continue to be recognised in this way and that others are improving to follow their example of best lending practice in the interest of customers and wider society. This fits well with the co-operative values of openness and honesty.

Women in Finance Charter

In 2016 LCCU was one of the first financial institutions in the UK to sign up to the Women in Finance Charter. The charter, which was launched by HM Treasury, aims to improve gender diversity in senior positions in the financial sector. A balanced workforce is good for business, customers and workplace culture, so the charter commits financial services providers to work together to build a more balanced and fair industry. Equality is a core part of what credit unions are all about, so it is natural for LCCU to support the Charter. Since being part of the launch of this initiative there are now nearly 300 financial institutions following LCCU's lead and committing to the Charter.

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