The Credit Union Movement
Credit unions have always been part of a large international movement.
There are more than 86,000 credit unions in 118 countries
around the world, enabling over 375 million people to access affordable financial services.
Credit unions operating in Britain today are extremely varied in size, membership and the range of services they offer, but they all share a basic philosophy and set of principles with the worldwide credit union movement.
Developed in the 19th century
The ideas and values central to how credit unions work were developed in the 19th century, by pioneers such as Robert Owen in Britain. The movement grew quickly throughout America and Canada and soon began to have an influence across the rest of the world, notably in Jamaica during the 1940’s, and in Ireland during the late 1950’s.
Credit unions took longer to take off in England, Scotland and Wales, and there was no legal structure for credit unions in the UK until 1979. People who had seen the idea work in Ireland, the Caribbean, and North America were amongst the first British credit union pioneers.
There are now around 2 million credit union members in the UK, including more than quarter of a million in Scotland.
Credit Unions vs. Banks
Customers and ownership
- Credit unions are ethical financial co-operatives owned by their members.
- Eligibility to become a member is unique to each credit union (its common bond) and is determined within their rules.
- Each member holds a £1 share in the credit union.
- Banks have customers rather than members.
- Customers may not be owners in the organisation.
- Banks are owned by investors/shareholders who may or may not be depositors with the bank.
Main purpose
- Credit unions are not-for-profit organisations, existing primarily to serve the needs of their members and the communities in which they operate.
- Any surplus funds generated by a credit union are paid back to the members as a dividend.
- Loan rates and investment in new and improved services.
- Banks are in business primarily to generate profits for their investors/shareholders.
Control
- Credit Unions are run by members, for members.
- Each credit union has a volunteer Board of Directors.
- The Directors are all members of the credit union and are elected by the membership to serve them.
- When it comes to voting, each member of the credit union has one vote, no matter how much they have in savings.
- Banks are governed by paid directors.
- Neither bank directors nor shareholders need be customers of the bank or based within the community the bank serves.
- When it comes to voting, only the investors/shareholders of the bank can vote. Bank customers have no vote.
