Madison, WI—In early October, Association of British Credit Unions (ABCUL) published the results of their pilot project, which received praise from the British Financial Secretary to the Treasury, Stephen Timms, among others. The primary aim of the project was to tackle the problem of financial exclusion, a major issue facing Britain right now. ABCUL has made headway on this aim in four key ways: by reducing delinquency rates, growing assets and membership, decreasing operating expenses and improving net capital.
Credit unions and banks are typically seen as competitors, but as shown by the results of a recent collaboration between the ABCUL and Barclay's bank, their combined efforts can produce excellent results. For the past two years, ABCUL and Barclay's, with support from the World Council of Credit Unions, Inc. (WOCCU), have been implementing WOCCU's financial monitoring system, known as PEARLS, in nine credit unions throughout the UK. David Richardson, WOCCU technical development manager, says of his experience, "For the past 2 1/2 years, I have worked closely with ABCUL to help train British Credit Union leaders in the use PEARLS so that they can have a greater impact in providing financial services to their communities. It has been most gratifying to see the impact that PEARLS has had in the short time it has been used. PEARLS is more than a set of financial ratios. It is a monitoring system that reinforces the credit union ideology and defines with greater clarity, the difference that credit unions can make in the financial marketplace."
The results of the two-year pilot were so impressive that Barclay's has agreed to fund the implementation of PEARLS in 11 more British credit unions, while ABCUL is working on offering PEARLS training and education to 100 additional credit unions in the next three years, helping 40 of those credit unions to develop and implement a strong business plan, and developing an online benchmarking tool so all credit unions may compare their performance with that of their peers.
"The results from PEARLS look very promising," said Timms. "PEARLS empowers credit unions to move towards sustainability and to become stronger and more business like. Rigorous credit assessment makes it possible for members to get access to credit before they have a saving record, providing a much more realistic alternative for many people to high interest lenders. PEARLS also opens up the prospect of a new and more diverse range of services being made available to members. I'm sure that further progress will follow."
PEARLS has also influenced a number of the participating credit unions to change their lending policies, allowing new members capable of repaying loans more immediate access. In the old system, the members had to prove themselves a regular saver for 13 weeks before they were eligible for a loan. Now qualified individuals may access a credit union's loan services when they need it, while other measures prevent those with an inability to repay the loan from borrowing and thus further diminishing their credit standing. "Credit unions are especially helpful in providing affordable loans and "free, face-to-face financial advice," says Timms. "The credit union movement is now positioned to develop and grow and to realize its full potential in 21st century Britain."
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 51,000 credit unions in 100 countries serve 196 million people. Learn more about World Council's impact around the world at www.woccu.org.