Credit Unions are non-profit making financial co-operatives run by their members under a common bond. Members own the credit union as each £1 saved buys one share in the C.U. Members save and borrow.

All money a C.U. has comes from members' shares, joining fees, and possibly some sponsorship. The running costs are met essentially by "profit" made by interest charges on loans. C.U.s do not pay any "interest" on savings but as they become more successful a dividend can be paid proportionate to the amount of shares a member has.

The C.U. is run by the members who have obligations to elect a management structure and who have a right to vote at the AGM in return.

The Credit Union is run by Volunteers.

Credit Unions work on trust and within the community.

Credit Unions provide a viable alternative for saving and borrowing. The cost of borrowing is competitive at a max interest of 1% per month (12.7% APR) on the decreasing balance.

Members are encouraged to save whilst repaying loans so they can increase their shareholding by the end of their loan period.

Credit Unions are regulated by the Credit Union act of 1979 (rev 1989/96).

All C.U.s are run as a limited company and under business principles. (We have a responsibility to keep money safe for all who invest in the C.U.)

Credit Unions are affiliated to an umbrella organisation. In our case we are affiliated to ABCUL (the Association of British Credit Unions Ltd).

The Common Bond (The Factor that Unites the Members) The concept of a common bond is that within a community people share a common purpose or affinity and it is this factor that binds the members together.

The bond can be defined as:
. Members of a community such as major centres of population.
. Employees within a company (a group of employees clearly have a common bond)
. A member of an association or organisation such as a trades union or church group


The important thing is that people are known by the group either in a community or workplace and that there is basis of trust. After all the community is using its own member's money.

The UK Credit Unions
In the UK there are about 660 Credit Unions with approximately 200,000 members. These are community and emplovee based. They have around £1OOm assets with some £90m out on loan. Community based C.U.s rely on the local resident population within a common bond area for their membership. The employee based C.U.s rely on employers agreeing to setting up of a workplace C.U. in which their employees can participate.

Credit Unions do not discriminate due to:
- Race, creed, sex, social standing,
- Past loan history
- Lack of credit record
- Living on income support
- Living in blacklisted areas
- Insecure employment
- Lack of loan history e.g. return from working abroad


However as we must look after our members' assets, the granting of loans has to be business based. We have a Credit Committee that interviews applicants to assess their credit worthiness and "trustability", and importantly their ability to repay. Before a loan is granted members must save regularly with us for 13 weeks. The value of loans is determined by the WCU Current Loans Policy, the amount of time the member has belonged to the C.U., any past loans they have had, and their ability to repay. In line with our community service mandate, small emergency loans are also available, but they too must follow the "trustability" and repayment rules.

Given that we are running essentially a members' co¬operative, WCU can give a better deal than bank loans, Provident cheques and loan sharks. It is important to note that credit unions are not able to offer instant relief from poverty, more to encourage financial well being over a period of time.

How Safe is Members' Money?
Credit Unions operate under, and comply with, Acts of Parliament, are regulated by the Financial Services Authority (no. 214302), and are run under business principles. We have many legal and internal safeguards and have developed a substantial set of policies and procedures, which are designed to ensure the sound and profitable running of our Credit Union. We are insured against fraud and theft and are audited independently.

The Financial Cycle
Credit Unions are funded by money that they get from member's contributions in shares, joining fees, and sponsorship. The Credit Union earns money by charging interest on the loans to members which is currently limited to a maximum of 1 % per month on a decreasing loan balance (12.7% APR). The C.U. charges 1% per month for any loan amount allowed under our rules and bylaw. The loan interest earned by the C.U. goes towards servicing the needs of the C.U. in terms of paying its running costs and if there is any surplus to return money to the shareholders. Running costs are administration, rent, rates, telephones, stamps etc and an amount required by law to be put into reserves to cover bad debts.

The money cycle is: . Money from the members' savings goes into the common pot - from this pot loans are made. . Repayments of loans plus interest are paid back into the pot and any "profit" is used for running the Credit Union. . If there is any surplus after all the running costs are accounted for then this can be paid out in the form of a dividend to the members proportionate to the member's shareholding. . Some small income is also earned by prudent investment of member's money.

C.U. officers and volunteers do not get paid other than to cover out of pocket expenses. (There is a small payment allowed in the rules to the C.U. Treasurer). However paid staff may be employed.

Dividend
The payment of a dividend, if at all, depends on the amount of surplus money available. Details are decided after the end of each financial year at the AGM, in the light of a recommendation by the Board of Directors. By law, the maximum allowable dividend is 8%, but they are often much less, even zero, especially for new credit unions.

The Management Structure
The members elect a volunteer Board of Directors (including a Treasurer and Secretary) who are responsible for the day to day running of the C.U., ensuring that proper business decisions are made and who are accountable to the members. WCU has 7 Directors, who are elected at the annual AGM. The AGM also elects a Credit Committee of up to 6 people who process loan applications and ensure as far as possible that loans are made with minimum risk. The Credit Committee follows up loan repayments that fall into default and if necessary start a process of legal action. An essential part of all C.U.'s is the Supervisory Committee. This is a committee of 3 people. They act as an internal audit function, constantly checking that all procedures are correctly followed, that members' interests are protected and that we comply with legal requirements. We also have a Money Laundering Reporting Officer who looks out for illegal money transactions. All C.U. members can be eligible for any of the jobs, and many volunteers in C.U.'s take the opportunity to learn new skills. All volunteers are all committed to teach other volunteers often to pass on skills that are useful in the outside world, such as book keeping or computing skills.