A new campaign is encouraging employers to form partnerships with credit unions to help staff save and get affordable credit.
Launched by the Association of British Credit Unions (Abcul), the campaign was designed to raise awareness of the sector. Employers across the UK are already using credit unions to enable employees to gain access to savings and affordable credit facilities with payments deducted from pay. These include Admiral Insurance, Royal Mail, British Airways and the NHS.
According to Abcul research funded by Citi Foundation, 70% of employees who take advantage of credit union partnerships feel more financially capable and better supported. Another study by Money Advice Service found that 59% of employees with current financial worries say money concerns prevent them from performing their best at work. And a report by the Fairbanking Foundation concluded that while only 26% of credit union borrowers saved regularly before joining their credit union, 71% intend on saving regularly after repaying their loan.
Matt Bland, head of policy and communications at Abcul, said: “In our conversations with employers, it is clear that many are not aware of the financial difficulties facing their staff. Those that do have sadly seen it became a serious issue in the workplace before they had chance to respond. We regularly hear horror stories of people falling into a downward cycle of repeated and escalating payday loans – robbing Peter to pay Paul.
“Credit unions have a proved track record of turning borrowers into savers. Research such as the Save As You Borrow report proves that credit unions are playing a vital role in helping their members become financially responsible. The report shows that credit unions turn 71% of borrowers into savers and that 96% of employees that are encouraged to use payroll deduction through the credit union have found it helpful.
“All employers have to do once a partnership is set up is spend a couple of minutes making the deductions each pay day – one file transfer, one payment. All employees have to do is agree to a deduction of their choice per month – and it comes directly from their salary, making life easy for everyone”.
To support the campaign, Abcul has also launched an online platform, Work not Worry, with information on how employers can work with credit unions to support staff.