A London-based worker co-operative that provides services to credit unions is changing its structure into a user co-operative. Since 2000, Credit Union Solutions has been providing back office support to credit unions in various areas of London.
The enterprise initially started off by working with Hounslow Employees Credit Union, which a few years ago merged into Thamesbank Credit Union.
“Kesho Systems donated their software to our cause and our first client was Hounslow Employees Credit Union who were struggling to keep on top of their administration.
“Over the years they have morphed into Thamesbank and now provide services to Wandsworth, Richmond and Kingston as well,” explained Graham Tomlin, chief executive and director of the co-operative.
In 2012 Credit Union Solutions became a worker co-op with seven staff members, three of these being directors of the co-op.
“We have successfully bid for hundreds of thousands of pounds of grants for our client credit unions and continue to do so where there are projects that interest us and them,” he added.
“Our clients are becoming ever more successful and this is achieved by sharing best practice, standardising administration and providing a much better service than could be achieved were they operating alone.”
With the new user co-operative structure, clients will become members of the co-operatives and will not have to pay VAT, saving over £50,000 a year. Currently a client can pay around £10,000 a year in VAT and make only a surplus of £3,000 or £4,000.
“We feel that this is disproportionate and the kind of circumstance where a VAT Sharing Group could be formed,” said Mr Tomlin. “To do this our clients need to be owners of the business not just users.
“With so much pressure on our clients to hold ever larger sums in reserve it seemed to be a no brainer for us. Last year Credit Union Brent & Ealing paid £11,000 in VAT, which was larger than it generated in profit.
“We are keen to continue with a co-operative structure and our clients are more than happy to adopt a structure that will produce much better savings for them.”
To adopt the new structure the rules of CUS need to be rewritten to include client credit unions and CUS staff as co owners. The credit unions also need to seek approval from the Financial Conduct Authority and the new rules of CUS need to be registered following which an application to HMRC needs to be made.