21 June 2024

Credit union keeps ‘fatcat bonuses’ in the local economy as it marks 25 years

An organisation set up to help families in Hull manage their finances estimates that it has saved members across the region £25 million in interest charges during the quarter of a century since it was launched.

HEY Credit Union – which was founded by a small group of Hull City Council colleagues in 1999 and now operates across the Humber region – has also returned £1.6 million in dividends to its savers.

John Smith, HEY Credit Union’s governance officer, said: “In a commercial bank, that money would most likely have lined the pockets of corporate investors or global hedge funds or ended up as ‘bankers bonuses’ for highly paid managers and directors.”

Feedback from the 18,000-strong membership indicates they place a high value on the efficiency and flexibility of the service and see HEY Credit Union with its not-for-profit co-operative approach as a fairer alternative to savers and borrowers.

Matthew Stevens, chief executive of HEY Credit Union, said: “The cost-of-living crisis has brought more people to us as they regard us as a trusted local alternative to high street lenders. They seem to like the friendly service and the fact that we are working for them and not trying to make money out of them.”

Since HEY Credit Union was founded it has outgrown a tiny office in the Guildhall and now has its own HQ in Brook Street, Hull city centre.

The aim from the outset was to provide safe savings accounts and competitive credit facilities that help people to afford their lives, build financial resilience to withstand hard times and manage their money wisely.

Most of the services are online, but as the major banks have reduced their physical presence in towns and cities HEY Credit Union has strengthened its commitment to retain a visible presence in key communities. It now operates branch offices across the Hull and Humber region in Bridlington, Goole, Scunthorpe, Grimsby, Driffield and Withernsea.

The branch at the Shores Centre in Withernsea is open Mondays, Wednesdays and Fridays from 9am to noon.

Matt Lloyd of HEY Credit Union in Withernsea said: “We are delighted to continue providing an in-branch service to help meet the financial needs of people in the local area. Having this presence allows us to make a real connection with people, and is something that is appreciated by our members especially in this age of personal finance being largely managed online.

“We are proud to be able to see the ‘Credit Union difference’ in action – for instance, one member commented how her Family Benefit Plan allows her to manage her money better, by being able to save easily each week for Christmas, while having access to a line of credit that helps her meet expenses such as school uniforms and birthday presents.

“We enjoy working with the wider community to spread the message that the Credit Union is here for everyone. For example, we worked with the Shores Centre on the Multiply scheme for people who needed support with numeracy skills by encouraging them to save.”

John Smith was one of 21 founder members in 1999 and served as chief executive until stepping down in 2023. He recalled that, at a time when Kingston Communications was being floated on the Stock Exchange, many of the early low-cost loans were to people who wanted to buy shares in the much-loved organisation.

John said: “We had heard great things of financial services co-operatives called credit unions being set up in other cities and we wanted to provide our colleagues at the city council with easy ways to save, access to affordable loans and other handy services to help them manage their money better.

“It was very exciting when we received our registration certificate from the Registrar of Friendly Societies on June 10, 1999, and were able to open for business.”

Since then HEY Credit Union has issued 81,310 loans to a total value of £59,018,666. The biggest spend has been just over £14 million on home improvements, which accounted for 15,975 loans.

A total of £8.8 million was spent on cars, caravans, cycles and motorbikes, just over £6 million was borrowed to spread the cost of holidays and £5.8 million was used to buy furnishings, domestic appliances and household goods. Other reasons for borrowing have included computer equipment, clothing, school uniform, vets fees, legal fees, family celebrations, bereavement costs, bonds and rent, paying off a mortgage and consolidating debts.

Christmas has been one of the biggest spends over the years with the issue of 16,467 loans worth £8,165,389. A Christmas Saver account was introduced at the request of members and is believed to be the largest in the Humber region, with about £1 million saved into it each year.

The HEY Credit Union board has calculated that its members have saved at least £25 million in interest charges by coming to them for affordable loans instead of dealing with doorstep lenders and other high-cost credit providers.

John said: “Added to the dividend, HEY Credit Union has therefore pumped at least £26.6 million back into the regional economy, demonstrating the power of co-operative enterprise to make a significant social impact.”

Businesses and other organisations are also supporting HEY Credit Union with the introduction of payroll partnerships, under which more than 30 employers provide their workforce with direct payroll deduction for savings and loans.

Matthew said: “This has been a growth area because payroll deductions, before a wage or salary hits the worker’s bank account, are proven to be the best way to start and maintain a savings habit which builds financial resilience, enabling the saver to withstand the shocks of unexpected bills, loss of income, ill health and adversity.”