Friday 4th July, 2014
Project Credit Union - Day 8
Existing credit unions
My London Community CU “welcome pack” arrived in the post. As with the London Capital CU it looks like the credit union as a whole has a single bank account (i.e. sort code and account number combination) and you have to use your membership number as the transaction reference in order to pay money into your credit union “account”.
Since the facilities for this account are pretty limited, I decided to apply for their Current Account which sounds as if it should be pretty much on a par with a high-street bank account. Unfortunately (presumably because of money-laundering concerns), I can only apply for this account in person in a branch. I’ve filled in the application form (pdf) and I plan to visit the Bethnal Green branch in the next couple of days to complete the process.
Chris used his London Capital CU online banking to setup a BACS transfer facility from his credit union account to his bank account. It’ll be interesting to see how this works and whether there’s any fee for making such transfers.
Minimum viable account?
We had a further exchange with UKCU and I think we’re now pretty clear that a traditional credit union “account” does not have its own BACS-style sort code and account number and the only way to offer something close to a high-street bank current account is to partner with ABCUL. Even then it may be prohibitively expensive to operate for a small credit union.
We’ve been thinking a bit more about what are the minimum facilities we’d want an account to have. When we first wrote about a minimum viable credit union, we listed “electronic transfer in & out”. In recent days we’ve done some more thinking about what we mean by this.
To make the whole proposition viable we think that we’d want a customer to be able to put the majority of their transactions through the account. Realistically this means the account needs to have its own sort code and account number and probably needs to have an associated debit card.
Study group application
So it seems as if our only way forward is to find out more about the CU current account that ABCUL administer. ABCUL made it clear that to find out any more about this account, we need to register as a study group, so we decided to bite the bullet and fill in the application form (pdf).
The application form isn’t too involved, but it does feel as if there’s an aspect of having to justify why you ought to be allowed to setup a credit union. However, since the reason we’re registering is to find out more information so that we can decided whether to setup a credit union, this feels a bit circular.
While we understand that associations like ABCUL need to cover their costs and we’re totally happy to pay the application fee (£50), it does feel a bit odd that some of this information isn’t just in the public domain.
In order to fill in the application form, we had to choose a name for our study group. Apparently you have to apply to the FCA for permission to use the words “credit union” in your organisation’s name. Amazingly there’s a three-page form specifically for doing this!
Anyway, we decided to avoid this form by not using the words in our name. Rather unimaginatively we chose “Free Range” as the study group name. We also had to identify a common bond to put on the form, so we’ve gone with:
An individual who follows an occupation in the following ‘Minor’ Group of the ONS’ SOC: “IT & Telecoms Professional” (213)
Hopefully these will do the trick. We’ll let you know how it goes.