Credit unions

A credit union is an alternative to a bank or building society. It's a community based financial co-operative whose members share a common bond. They are not-for-profit organisations set up, owned, and managed by their members.

In Harrow there are two credit unions that serve anyone who lives or works in the borough:

• Harrow savings and loans credit union (part of the Hillingdon credit union group)
• M4Money credit union

The main reason for setting up a credit union is for members to pool money to provide affordable credit and loan facilities to members.

Credit unions also promote a savings culture amongst its members, as money given out for loans is the money saved by members (referred to as shares).

Who runs the credit union?

The credit union is owned and operated by its members for its members so you always get a fair deal and any profit that is made is given back to members as a dividend.

A board of directors is elected from within the membership of the credit union.

This usually takes place at an annual general meeting open to all members of the credit union. Elections are held on a one-member one-vote principle, regardless of share size.

The credit union is audited by independent certified auditors. Savers are protected by the Governments Financial Services Compensation Scheme (FSCS) scheme. It is eligible for deposits up to £75,000. It is the same standard that applies to banks and building societies.

What makes credit unions different?

Credit unions differ from other financial institutions in many important aspects:

• it is governed democratically by its members through a board of directors elected by the members from within the membership
• it grants equal rights to all members
• it offers individuals control over their finances and encourage self-sufficiency among members
• the interests of members come first, rather than the interests of external or third parties
• it is subject to stringent regulation by the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) in the same way as banks and building societies
• it has legal limits on the interest rates they can charge on a loan (currently a maximum 3% per month)
• it gives local people the opportunity to invest their savings ethically for the economic and social benefit of their community