Scotland’s credit unions: Investing in our future

1. Context
2. The study
3. Key findings
4. Points to consider

• Context
• The study
• Key findings
• Points to consider
• Full report

Context

Credit unions (which are financial cooperative organisations owned and controlled by their members) have been an important part of the landscape of financial services provision in Scotland for over 45 years. Originally established as alternative credit providers for underserved communities, credit unions are now a diverse group of organisations offering a wide range of products. The report focuses on long-term saving and outlines the findings of the work of a Credit Union Working Group, set up in 2014, in relation to two priorities for action:

1. Payroll deduction schemes (in which employers allow employees to save directly into a savings account before they receive their pay); and
2. Financial education.

The study

Scotland’s Minister for Business, Energy and Tourism set up a Credit Union Working Group in 2014 to grow credit unions’ capacity and diversity of membership. The group met five times and, following initial discussions, prioritised discussion surrounding:

1. Promoting the uptake of payroll deduction schemes among private and public sector employers; and
2. Raising the profile of financial education (p6).

The group’s investigations included two mapping exercises: of credit union payroll deduction provision; and junior saver schemes. The report describes the group’s review of these issues as priorities for action and makes recommendations for credit unions, Government, local authorities, schools and employers for helping credit unions to create an ‘enabling environment for credit unions in Scotland’ (The Scottish Government, p6).

It also provides overview of other areas which require further investigation. The study considers credit union provision in Scotland and credit union users as a whole, which includes adult and junior (child) members. The report does not explicitly set out research questions.

Key findings

The study found that:

• 79 per cent of the responding credit unions ran payroll deduction schemes.
  • Credit unions faced significant challenges to building and maintaining partnerships and attracting new members once established.
  • Private sector employers are unaware of or misunderstand the role and benefits of credit unions and overestimate the administrative burden associated with implementing schemes.
  • The most successful schemes involve a workplace champion and employers can highlight the benefit of automatic saving in reducing financial stress and worry.
• Several credit unions offer junior saving schemes.
  • Maintaining schemes was very difficult and successful ones relied on champions.
  • Schemes were normally loss making
  • The most successful schemes operated in primary schools. There were particular difficulties engaging secondary school pupils and it would be helpful to find an initiative which had successfully moved from a primary to a secondary school.

Recommendations made by the group include that:

• Credit unions should: highlight the benefits and ease of payroll deduction schemes to employer and employee; reach out to young people/students through partnerships and new media; share best practice and promote succession planning to school partners; and collaborate with local money advice services to improve financial capability in the community.
• The Scottish Government and local authorities should (these include actions already taken): advocate, recommend and promote workplace deduction schemes directly to employers and through networks and contribute to ensuring that setting them up is smooth; showcase credit unions as ethical lenders when delivering workshops in schools and investigate funding for the development of junior saver schemes; continue to highlight to school leaders the benefits of embedding financial capability in general education (ages 3-15); involve credit unions in school Money Weeks and a future national conference on financial education.
• Schools should: partner with a local credit union in a junior saver scheme; consider allocating resources to succession planning; link initiatives to professional learning and Improvement Plans; work with credit unions and employers to develop and share good guidance.
• Employers should: offer credit union payroll deduction schemes to staff and promote them.

Points to consider

• Methodological strengths or limitations: The report is based mainly on a review of primary evidence from a limited sub-set (and largely self-selecting) sample of credit unions and collaborative evidence offered by working group members and is set out primarily as a collection of recommendations and actions taken.
• Generalisability/ transferability: Of over 100 credit unions in Scotland, the mapping exercises undertaken received responses from only 28 and 51 credit unions respectively, which may mean that the findings are not necessarily representative of all credit unions in Scotland.
• Relevance and applicability: Notwithstanding the limitations noted above, the recommendations should be of wide relevance to organisations across Scotland and other countries of the UK.

Full report

Scotland’s credit unions: Investing in our future - full report