Anthony MacRow-Wood, Churches Mutual CU

Canon Antony MacRow-Wood Churches Mutual Credit Union Team Rector in Poole 1

CMCU How Churches can help Credit Unions and The proposed Churches’ Mutual Credit Union Ltd. Revd. Canon Antony MacRow-Wood ACA Chair of Shadow board

Presentation to Portsmouth Diocesan Synod 2nd November 2013

The Church of England’s Current National Strategy

CMCU

• Sir Tony Baldry in answer to a recent question in Parliament: “The Church of England is developing a three-pronged strategy in its work with credit unions”. • The first is to link parish churches to local credit unions to offer support where any is available. • The second is to set up an archbishops taskforce to work with the credit union movement and the local banking sector to produce credible alternatives which offer financially responsible products and services. • The third is the plan to found the Church’s credit union, primarily for clergy and Church employees.

Part 1; How can Churches help their local Credit Union?

CMCU

• Be strategic – send someone reasonably senior to ask what help would be most useful • Listen to the reply • Could be: Governance Capital injection Savers Borrowers Host a Service point Publicity

How can Churches help their local Credit Union?

CMCU

Governance: • Credit Unions are governed by volunteer directors, Boards can lack crucial skills. • Our churches have some well qualified people with financial, business and legal skills. • Time commitment 1-2 evenings a month

How can Churches help their local Credit Union?

CMCU

Capital Injection: • Credit Unions are required to have 3% capital to assets ratio by September 2014. • Deferred Shares count as capital but churches need to do due diligence and have regard for the advice on C of E website from the Church’s Lawyers re investments. • Individuals or churches can make donations (for churches this has to be in line with their charitable purposes).

How can Churches help their local Credit Union?

CMCU

Savers: • If the Credit Union is well lent out (70% or more of deposits are out on loan to members). • Has a reasonably high demand for loans but is concerned about their liquidity. • They will welcome people who join and just want to save.

How can Churches help their local Credit Union?

CMCU

Borrowers: • If the Credit Union is not well lent out (less than 60% of deposits are out on loan to members). • They may not welcome more savers as this will erode their capital to assets ratio. • They will welcome more borrowers. Christians should see this like buying fairtrade goods – you may pay a premium for the ethical choice.

How can Churches help their local Credit Union?

CMCU

Host (and help run) a Service Point: • Credit Unions are wary of the ‘Poor Man’s Bank’ label – don’t want to operate out of tatty premises. • Ideal location – out of town estates with no access to financial services. • Find volunteers to help run it. • Wonga’s average loan £178, someone saving £2 (price of a lottery ticket) a week for two years would not need a payday loan.

How can Churches help their local Credit Union?

CMCU

Publicity: • Help create news stories like the recent visits of Bishops to credit unions. • Have posters up and leaflets available in your church. • Word of Mouth – be informed about services, products and access channels so you can tell people about their local credit union.

Part 2: The Origins of CMCU

CMCU

• 2007/8 Consultation with clergy about pensions and retirement housing • It suggested clergy needed a tax efficient means of saving and a source of affordable credit (which is what a credit union does) • Autumn 2009 the Archbishops’ Council agreed to payroll deduction • Drafted a Business Plan with the help of an initial private donation & set about fundraising

Origins – continued

CMCU

• Positive response from a number of Dioceses (including Portsmouth) • Church Commissioners offered a £325k Subordinated Loan in exchange for taking over the car loan scheme. • Catch 22 – most charities wanted to help but couldn’t - their objects wouldn’t allow it. • About to mothball the project when new Archbishop arrived coupled with an approach from Church of Scotland

Membership would be open to:

CMCU

1. Baptised members of Church of Scotland & Anglican Churches in GB (or those formally received into membership) provided that: • They are ordained or training for ordination or • They are a Licensed lay minister, or • They are employed by a CofS or Anglican Church or Charity, or • They are a trustee of a CofS or Anglican Church or Charity

Membership would be open to:

CMCU

• 2. Persons living in the same household as the above. • 3. Church of Scotland or Anglican Churches or Charities based in Great Britain. • 4. Employees of Ecclesiastical Insurance Co. • And eventually….. • Members of an Anglican/CofS Electoral Roll or equivalent and other denominations

What will the CMCU do for its members?

CMCU

CMCU will provide:• An easy to use, ethical and accountable provider for tax efficient saving (ISAs) and affordable credit • A competitive alternative source of loans for cars, white goods, holidays and a means to spread peaks and troughs of general household expenditure • The capacity to begin saving, improve financial capability and plan for retirement throughout one’s working life • In due course provide mortgages for retirement housing (ambitions to be a Version 2 credit union)

Strategy for CMCU

CMCU

• By taking on the Car Loan Scheme, coupled with advantages of Payroll Deduction can build viable & sustainable business within 3 years • Concentrate membership recruitment on those on the central payroll but have direct debit facility for others as well • Launch (to the public) with more than 5% capital so can offer interest on savings

Strategy for CMCU - continued

CMCU

• By including Trustees of Anglican/Church of Scotland Charities will have members with the expertise to run it • Use Fern’s Abacus system with ‘Internet Banking’ so members do as much of their own account management as possible • Work in partnership with EIG (complementary businesses not rivals) and so have access to office premises at cost and marketing expertise.

Main Points from Surveys about CMCU

CMCU

• High response rate in all three surveys – 1571 responded to the latest survey (about 10%) • 585 of whom would join in first 3 months • Healthy appetite for saving • Equivalent numbers to current CC car loan scheme would take car loan • Reasonable appetite for other loans • Survey shows we have a viable business so decision taken to apply for registration

Main Points of Financial Model

CMCU

• With £260k in grants (and some on going support in kind) plus £400k in Deferred Shares can comfortably maintain capital above 5% (£200k in DFs already committed by CCs) • Sustainable in Year 3 • Car Loans as %age of total loans decreases in years 4 & 5 as membership spreads more widely • Corporate deposits essential for liquidity

What will the CMCU do for the Church? – a low cost source of mission funding…

CMCU

• As diocesan and parish resources diminish, sources of mission funding will decrease, imagine 10 years hence:• A parish mission plan calls for a £40k investment in café facilities at the church • A Trust fund offers a £20k grant and suggests the PCC apply for match funding as a loan from CMCU • CMCU requires the PCC and PCC members to join and for 10 trustees to act as guarantors of the loan • Available Trust funds go further and parishes make better decisions with greater personal commitment from the leadership - a powerful tool for the future

Timeline to Launch of CMCU

CMCU

• Just submitted Application to the Regulators • Continuing to raise start up capital (next 6 months) • May 2014 Launch liturgy as part of General Assembly of CofS • ‘Soft launch’ at General Synod July 2014, begin trading 1st October 2014