Public and Commercial Services Union

What is the purpose of a credit union?

It is a financial co-operative owned and run by its members for the benefit of the members in accordance with strict laws and Government regulations.

Who owns the credit union?

Everyone in the community that has a defined legal connection with the proposed Credit Union, for example - membership of or association with the PCS trade union. This is known as a "common bond"

Who runs the credit union?

The members do through elected committees -the officers, who are educated in the tasks they perform.

How does someone join the credit union?

If you qualify to join -see "who owns the credit union?" above. Then please read the rest of this page and complete and return the form to Molly Moyo at HQ (credit union's project manager)

What is the commitment of the member to the credit union?

Every member makes a commitment to save regularly with the credit union. Every £1 saved buys a share. A member has sole ownership of their shares. Children can save with the credit union, but cannot become members until they are 16 or qualify as borrowers until they are 18.

What happens to this money?

It is placed in secure investments of low risk. Interest is earned on it for the credit union.

The main purpose of a credit union is to lend out the funds held to the members at low rates of interest, and these loans are repaid by regular instalments that include interest.

The credit union can also insure the lives of its savers and, depending upon age, this insurance can be up to twice the value of shares held for each member. All money held by a credit union is insured against dishonest acts.

How are loans given?

After members have saved for a particular time -agreed by the officers as a policy - they can apply for a loan. The amount of money that can be borrowed and the repayment terms will depend upon the period and value of savings, the purpose of the loan, amount requested and the character of the member.

All loans will be protected by life insurance with premiums paid by the credit union. This means that dependants will not inherit debts.

The officers of the credit union decide the rate of interest to be charged on loans. Formally by law and now by custom and practice the interest rate is 1% per month on the declining balance equivalent to 12.7% APR but the credit union can vary the amount.

By law every credit union has to maintain financial reserves to offset the effect of some loans that are not repaid in full. In addition to this, there is a national fund to which all credit unions subscribe to give further protection for members' savings deposited and loaned to other members.

Do members receive interest on money invested?

Money invested by members buys shares in the credit union. Once running costs have been met, the remaining surplus is paid to the members in the form of a dividend.

The dividend fund is paid out in accordance with the value of shares and the time that they have been held by each member, just like a loyalty bonus. By law the maximum bonus paid is 8% gross at the moment.

Who do I contact for more information?

For more information please contact:

Molly Moyo, credit union projects manager
PCS, 160 Falcon Road, SW11 2LN

• Telephone: 0207 924 2727
• Fax: 0207 801 2675
• Emailmail: creditunion@pcs.org.uk