First Principle: Offering Financial Help
The first principle of the SCU mission concerns offering people fair banking services that they cannot be given elsewhere. The requirements and procedures for joining the SCU are simpler than and not as strict as in other financial organisations. The SCU proposes loans on favourable conditions since it offers a lower fixed interest rate than other financial institutions in the market. Although the credit union was started for all those who want to have access to low-cost loans and fair banking facilities, these services of course are more important for those with financial problems, as they perceive them as a last resort. More well-off people use loans from the SCU, for example, to go on holidays or buy home appliances. Some of these people are with the Southeast Credit Union to fulfil their charitable needs by supporting their local community, since they save so that their savings could be distributed as loans for those who need such support. Underprivileged people take loans to pay bills, to buy school books for their children, or to get broken kitchen appliances repaired.
Members of the credit union can pay their loans early, without a penalty. Moreover, the organisation does not charge them if they cannot pay their loan instalments for some time provided that they inform the SCU about such problems in advance, so that they may find a solution together. SCU members can also get small loans with which banks do not want to deal; therefore, a number of people come to the credit union when they need to buy a new refrigerator because an old one broke down, or when they need to pay a flat deposit, or when they simply need to pay their everyday bills. Because of such conditions, the SCU is the best and fairest option for people who, as a result of their financial status, cannot even open a bank account in other banking organisations, to say nothing of receiving a loan from them. This means that the Southeast Credit Union supports those who want to join the banking system or who need help in order to get back onto the right track with their finances. In addition, the SCU, by offering people a saving scheme, creates for its members an opportunity to save that gives them a feeling of stability and confidence, given that some of them save for the first time in their life.
(...) But we are committed, and particularly here, to helping people who don’t have bank accounts, maybe have debts problems and trying to get out, to help them to take control of their finances, to give them some stability and some confidence in knowing that they’ve got little savings there. (...) (Donna)[1]
Today it is important to have a bank account, since a majority of financial transactions go through banking institutions. But not everyone can set one up at mainstream banks, and even working people can have such problems. The SCU, knowing about these difficulties, offers bank accounts to everyone (even to homeless people) and the only condition they need to fulfil is to join it.
But it’s not just for the low wages but the idea is to help those who are paid, those who can’t get a bank account. They need a passport to have a bank account in one of big banks and they don’t have it, and nowhere else to go. We’ve got homeless people come in because they don’t have a bank account, they’ve got a hostel address, they’ve got no passport or driving license with a picture on it or anything. (Emily)
The SCU, by offering vulnerable people rejected by banks a chance to join the banking system, also helps them not to become engaged with people and organisations called doorstep lenders or loan sharks. Such people charge huge interest rates on loans and are often violent when it comes to repayment. People choose these less orthodox methods of accessing loans when they urgently need money but do not have access to proper banking services. In such a situation they do not think rationally and they often do not realise the true costs of such loans, which makes them easy victims for doorstep lenders who abuse their vulnerability.
(...) if you go to any of big banks and say “I want to loan ?50”, they’d go “No” because again they’re in the business of lending large sums over extended period of time, and so the only option will be an overdraft. But if that person hasn’t, if they’re not gonna lend them the overdraft, then the person thinks “How can I get this ?50?” In the past they may go to, say, Provident who doorstep cash loans but they charge 180 % APR.[2] So to borrow ?50 from Provident, even over the period of 2 months, will cost them probably ?60-?70. (...) And the idea obviously is that we could help people in the area avoid doorstep loans and get a bank account or have somewhere where they may have money pay in. (...) That’s we’re offering alternative, so people have an opportunity to avoid that style of lending. (Peter)
Some of the people who borrow money from loan sharks sink deeper and deeper into debt as a result of ever-rising interest rates, and they find it neigh-impossible to escape this situation. The SCU actors, believing that this is unfair, try to help those who are the victims of doorstep lenders. The credit union has people coming from loan sharks such as Provident who look for help with clearing their constantly increasing debts. There is an extraordinary story of a woman in her seventies helped by the SCU who was with Provident for years as she could not get out of a circle of her rising debts. The woman first used Provident’s services when her children were small, as she had to buy uniforms and other school necessities for them. Since that time she had given Provident the majority of her income and yet still struggled to pay off her continuously growing debts.
When her income hardly covered a single loan instalment, she went to the Citizens Advice Bureau and its solicitor brought her to the Southeast Credit Union. The woman became a member of the credit union and got a special emergency loan. The SCU bought her debts and paid off all she owed Provident. She is now paying the credit union an amount she can afford and her debt diminishes apace, since the SCU interest rate is low and calculated off the remaining principle only. This woman also started saving a few pounds a week, which she could not do earlier. But the most important thing is that after so many years she regained a measure of peace and emotional stability. This story proves that the Southeast Credit Union is indeed able to lift individuals out of poverty.
The story above presents an exceptional case, as it tells about a problem that started many years ago. But, on a daily basis the credit union supports people enduring financial troubles caused by various life situations. Mary, after her marriage had broken down, decided to move to the southeast of England and to let her house in Yorkshire. When the tenants who rented the house wrecked it, she made a decision to put it up for sale. Unfortunately, one day before signing a contract with a buyer, Mary learned that she was charged a 12 thousand pound penalty because she sold the house earlier than the mortgage had been running for. She tried to get a loan to pay the penalty but because she already had a mortgage, all the banks she asked for a loan turned her down. The only financial organisation that agreed to help her was the Southeast Credit Union.
I’ve moved around a lot and I lived in Yorkshire for a while, and I was selling my house in Yorkshire. And the day before we were supposed to sign contracts, I found out from my solicitor that, because I was selling the house before a period of time the mortgage had run, I had 12 thousand pounds deficit to pay. 12 thousand pounds I had to pay as a penalty for selling the house earlier then the mortgage had been running for and I found that a day before I was about to sign. (...) and well it delayed the selling at the end because then I couldn’t get anyone to lend me the 12 thousands because I already had a mortgage anyway and my dad said to me “Why don’t you come to the credit union and see if they lend you some money?”. So he asked them if they lend me this 12 thousands and they said “Yes”, where other people wouldn’t ... (...) So they lent me 12 thousands to pay the penalty that I had on my mortgage (...) They got me out of the really difficult situation because selling of my house would probably fall in through. I needed it to go through because I was living down here and this house was up in Yorkshire. So I was very, very lucky as they got me out of the difficult situation. (Mary)
The SCU actors do not make assumptions and judgments as to why people find themselves in difficult financial situations. To them, everyone is worth helping and everyone has potential, but some people have simply not been given a chance by the system in which they live to use it. Actors at the SCU also realise that it is very easy to get into debt in modern English society, because it is culture itself that pushes people into poverty. Various companies continuously try to convince people that they need their products or services in order to be trendy and to belong to the elite community of their customers. The result of such campaigns is that people not wanting to be perceived as outsiders keep buying things, even those things which they do not need, to conform to societal expectations. But unfortunately such an attitude often leads to financial troubles. The SCU actors, understanding this situation, feel emotionally engaged in every case and for this reason, when they manage to help someone, they perceive it as a success.
The successes for me, for example, this lady who closed her account on the other day because she is moving and she said “I will come and say ‘Good bye’ before I go because you helped me so much”. And, you know, she says we helped her to clear all her debts, put her finances back into order and she is definitely going to join another credit union. I think that’s a success. When you see somebody who is really struggling just to put a pound in every week to take out their first small loan to, maybe, put a pound to repay it and suddenly gets control over it, there are sort of successes. (Donna)
