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Introduction from the Credit Union convener

As a new member, I would like to welcome you to the SCVO Credit Union. Membership of the SCVO Credit Union means you are an owner of the only financial institution that uniquely serves the voluntary sector throughout Scotland.

As you already know, by joining together in a credit union we can all benefit from pooling our resources – individual, accessible and regular savings help provide low cost loans to our members. Mutual investments mean mutual benefits.

But you see, this is only the start. Through time, and with your assistance, we plan to develop our credit union and the services we offer. This means that more benefits will be yours to enjoy.

Remember we all own the credit union. If you have any ideas on how it can be improved or don’t like something that is happening, have your say. All members are notified of annual general meetings and are most welcome to attend. And of course, we always have room for new volunteers on the management board, so contact us if you would like to get involved.

In the meantime, make full use of your Credit Union – that’s what it’s there for. And remember to spread the word among colleagues and family members.

Introduction

Put very simply, the SCVO Credit Union is an association through which its members are encouraged to save on a regular basis. These savings are pooled and invested, in other financial institution and in loans to members of the Credit Union. After administration costs are deducted and prudent reserves established any surplus can be distributed to members as a dividend. For this reason, savings are sometimes described as shares, each having a value of £1.

The SCVO Credit Union is run by its members for the benefit of its members, but this does not mean the policies and procedures are any less professional than those applied by any other financial institution. Everyone directly involved in the management of the Credit Union must be properly trained. We must also satisfy the Financial Services Authority (FSA) that our policies and procedures of the highest standard, before registration is awarded.

SCVO Credit Union is authorised and registered by the Financial Services Authority and is therefore subject to its rules and regulations. This includes close administration and financial controls, the service of the Financial Service Ombudsman Scheme for ultimate complaints adjudication, and inclusion in the Financial Service Compensation Scheme which provides a guarantee for your savings with us.

Data protection and sharing information

The Credit Union will process your data in accordance with your rights under the Data Protection Act 1998. We will use your information for the following purposes:

  • to consider any application that you make
  • to deal with your account and the provision of services
  • to undertake statistical analysis, financial risk assessment, money laundering check, compliance and regulatory recording, fraud prevention and debt tracing.

Under the Category F Consumer Credit Licence, we only disclose information outside the credit union to:

  • agents and subcontractors for operational reasons
  • any person, including insurers, who provide a service or benefit to you or for us in connection with your accounts
  • licensed credit reference agencies in accordance with the Data Protection Act and the terms of the Consumer Credit Act 1979
  • fraud prevention and other agencies to help prevent crime where we suspect fraud.

And, if compelled to do so by law, we will disclose information for the purpose of compliance and regulatory reporting to confirm your identity for money laundering purposes which may include the electoral register.

With all this in mind, the SCVO Credit Union will safeguard its members’ interests through proper adherence to agreed procedures and internal controls, and take the utmost care not to risk its members’ savings, or expose individual members to onerous loan arrangements.  This guide seeks to explain how the SCVO Credit Union operates and answer any questions you may have.

How does the Credit Union work?

We have tried to make the day-to-day operations and policies of the SCVO Credit Union easy to understand and, from the members’ viewpoint, easy to access. We offer payments methods:

  • on completion of a direct debit form. We will automatically withdraw the agreed amount from your bank account on the first of each month
  • on completion of a payroll deduction/amendment form. It may be possible to deduct the agreed payment directly from your salary. There is a requirement for prior agreement with your payroll office and a minimum number of members from your organisation for the viability of this service. Please contact the Credit Union office for further information.

Savings

Savings are made on a monthly basis, collected from you and credited to your Credit Union account. There are no upper or lower limits on the amount you can save each month, but when setting your savings level please do remember that you are not saving to a current account from which regular withdrawals are expected.

You should be comfortable with the amount you save and it shouldn’t detract from your ability to meet your anticipated monthly outgoings.

In addition to regular monthly savings, you may make further occasional deposits provided that the accumulated total of your savings does not exceed £10,000. This maximum is established by legislation and cannot be exceeded.

There is no lower limit to your regular deposits, but because the value of your accumulated savings will help determine how much you can borrow, you are encouraged to save at least £10 per month, if possible.

While it is our policy not to receive any payments by cash, additional payments may be sent by cheque clearly stating which account is to be credited, or by an internet banking method. When making a banking transaction by internet, please ensure you include the middle four digits of your account as part of the reference (10999901). If in doubt, please phone for further information

In the event of a loan being taken out, we reserve the right to take a lien (held as security) over the shares in the account until such time as the loan is repaid.

Interest (if paid), is based on each member’s average share holdings once a year, shortly after the AGM. The rate paid is provisionally determined by the board in line with FSA guidance policy and presented at the AGM for ratification by the membership. It is paid gross and should be declared to the income tax authorities.

Savings withdrawal

You may withdraw all or part of your savings at any time on giving written or email notice to the Credit Union. If you have a loan outstanding at the time you wish to withdraw your shares, the law states you may only withdraw an amount that will not reduce your share balance to less than the amount of the outstanding loan. Repayment of your savings will be by electronic transfer to your nominated bank account.

Loans

Once a saving pattern has been established and in place for at least three months, you may apply for a loan of up to a maximum of three times the value of your accrued savings at the date of the loan application. Generally, no loan may exceed an upper limit of £5,000. No loans of £5,000 or more will be given in the first year of membership.

In exceptional circumstances, we would consider loans up to £10,000. In this circumstance, we would require you to fulfil additional criteria and provide additional documentation.

Loans fall into two categories: secured and unsecured. A loan is deemed secured when the amount borrowed is less than or equal to, the value of the borrower’s savings. A loan is unsecured if the amount borrowed exceed the value of the borrower’s savings.

Because an unsecured loan may expose the Credit Union to a higher degree of risk, and bearing in mind the Credit Union’s duty to protect its members’ savings, an application for an unsecured loan will be referred to the credit committee for approval. For this reason, loan applications should be submitted at least two weeks before the loan is required.

The maximum repayment term for a loan is 36 months. Loans over £5,000 may be extended to be repaid over 60 months.

Share loading

The SCVO Credit Union has a policy against share loading, which is the deposit of a lump sum to increase the share balance to increase the amount that can be borrowed.

Loan payouts

The SCVO Credit Union policy is to not make any payments in cash or by cheque. Your loan will therefore be credited electronically by BACS to your nominated bank or building society account.

Loan calculator

A loan calculator for approximate monthly costs is available here.

Loan repayments

The capital sum and the loan period determine the monthly payments required to repay your loan. Additional, partial or full repayments are permissible at any time without penalty.

Loan repayment illustration tables using an APR of 12.68%

12 month repayment period 

Loan amount (£) Monthly repayment (£.p) Total loan interest (£.p) Total loan repayment (£.p)
100 8.88 6.63 106.63
500 44.42 33.11 533.11
1000 88.85 66.19 1066.19
5000 444.24 330.93 5330.93

24 month repayment period 

Loan amount (£) Monthly repayment (£.p) Total loan interest (£.p) Total loan repayment (£.p)
100 4.71 12.97 112.97
500 23.54 64.86 564.86
1000 47.07 129.79 1129.79
5000 235.57 648.80 5648.80

 36 month repayment period 

Loan amount (£) Monthly repayment (£.p) Total loan interest (£.p) Total loan repayment (£.p)
100 3.32 19.55 119.55
500 16.61 97.84 597.84
1000 33.21 196.78 1195.78
5000 166.07 978.59 5978.59

In practice the monthly repayment above is rounded up to the nearest £1. Other loan repayments can be calculated by multiplying the above figures as required.

Example

A member with a share savings of £200 might borrow £600 repayable at £28.24 a month over 2 years. At the end of the repayment period the total interest charged would be £77.76    (24 x £28.24 = £677.76, less original £600 borrowed). If they had rounded up their monthly payment by an additional £6.76 to £35 per month, their savings balance would have increased to £362 24, that is (£6.76 x 24 = £162.24 + £200 original savings). Based on this increased share balance, the member can then borrow up to £1086 (3 x £362).

Payments by direct debit

If your existing monthly savings exceed the required loan instalments you need not increase your monthly payment. If not, your payments must be increased to a level at least sufficient to repay the loan over the agreed period. By fully completing the loan application, any amendments to your direct debit are made automatically between the Credit Union and your bank.

Payments by payroll deduction

f your existing monthly savings exceed the required loan instalments you need not increase your monthly payment. If not, your payments must be increased to a level at least sufficient to repay the loan over the agreed period. This is done by the completion of an additional green payroll deduction authority amendment form as well as completing a loan application.

Saving through the loan repayment period

In order to provide our members with choice, it is the policy of this Credit Union to quote monthly loan repayment figures at the lowest amount possible, thereby making you aware of the benefit of low cost loans. However, in keeping with the philosophy of the Credit Union movement, we would strongly encourage you to continue the savings habit by recommending that you continue to pay an additional amount into your share account during this period. It will of course also allow you to borrow more next time if you so wish.  An illustration is given in appendix one.

Loan interest

Interest is charged at 1% per month on the reducing balance of the loan, which is an APR of 12.68% – a rate that compares well with commercially available options, especially for smaller loans repayable over short periods.

Top-up loans

In normal circumstances, a member can have only one loan from the Credit Union at any one time.

A loan may be refinanced up to two times after the initial loan, within normal lending criteria, before full repayment is required.

A minimum number of repayments – normally 25% of the value and term of loan being refinanced and at least six months – must be repaid before refinancing is considered.

A loan outwith normal lending criteria might be considered to assist in meeting an emergency situation.

Changing circumstances

Should you experience any financial difficulty in repaying your loan, you should contact the Credit Union office at the earliest opportunity and explain the circumstances.

Remember that all information received from or about you is held in total confidence and will not be divulged. You must provide details in writing of your changed circumstances for us to help resolve your problem. Please remember, we can only help you if you talk to us.

Loan cancellation rights

You have the statutory right to cancel a loan credit agreement within 14 days, on payment of the outstanding loan plus any interest accrued. Please contact the Credit Union office immediately if you wish to exercise this right.

Loan insurance

Other than for pre-existing condition limitations, all loans, after a health-qualifying period of six months, are insured for the death of the borrower. In this unfortunate event, any loan outstanding, up to the prescribed maximum in force at the time, will be claimed against the Credit Union’s insurance policy. Full details are available from the Credit Union on request. This service is provided free of charge to our members. The maximum insurance claim allowable as of January 2009 is £5,000 and is subject to change.

Managing your account

Annual account statements

Once a year, a statement showing all financial transactions on your account for the previous year, up to the close of business on 30 September, will be issued. Interim balance details can be obtained on application to the Credit Union office at any time.

Retiring or leaving the voluntary sector

In the event that your association with an SCVO member organisation is broken, you may continue in membership of the SCVO Credit Union but must advise the management committee of the changed circumstances as soon as possible. Your co-operation in this respect will be appreciated because the Credit Union is required to monitor its membership to ensure the common bond is maintained at an appropriate level.

Inoperative accounts

Any account held with £25 or less in shares and does not have any transactions between 1 October and 30 September the following year will be subject to a £5 annual charge until the account is either closed, or transactions restarted. This charge is non-refundable.

Ceasing membership

You may end your membership at any time simply by notifying the Credit Union on the appropriate form that you no longer wish to be a member. Your accrued savings balance at the date of resignation will be transferred to your nominated bank account.

The balance of any outstanding loan in your name will be set against your accrued savings, or must otherwise be paid in full, before your resignation can be accepted. It may also be possible to reduce your balance to a minimum of £5 and put your monthly savings payment on hold. This would allow you to maintain your account with us until such time as your circumstances improve and you restart your savings plan. Please contact the Credit Union if you want to consider this option.

Cancellation rights

A member has the right to cancel their membership with the Credit Union without penalty within 14 days of the day of the conclusion of the contract, or from when they receive the contractual terms and conditions.

Governance

The Credit Union is governed by and for its membership. Three committees are elected at the annual general meeting to oversee the management of the Credit Union. Members of these committees act in an entirely voluntary capacity and receive no remuneration. Committee members have a statutory duty to abide by the rules of the Credit Union and act in the interest of the Credit Union and its members at all times. The committees elect their office bearers from within their own membership.

The management committee

The management committee is the main committee of the Credit Union with a remit to establish policies and procedures, to oversee financial and administrative operations and to report to members and the registrar, and to ensure the Credit Union accounts are audited annually.

The credit committee

This committee works within the policies and procedures established by the management committee to consider all loan applications and authorise those which are approved for payment.

The supervisory committee

This is the compliance watchdog of the Credit Union, established to ensure all policies and procedures are developed within the framework of the law and rules governing the Credit Union movement, and are adhered to at all times by the management and credit committees.

Complaints procedure

A complaints procedure is in place to ensure an equitable resolution of any difference you may have with the Credit Union. Should you wish to make a complaint you should write in the first instance to the Credit Union secretary, giving full details and marking the envelope private and confidential.

Financial Services Compensation Scheme

We are covered by the Financial Services Compensation Scheme (FSCS) which can pay compensation to depositors if a Credit Union is unable to meet its financial obligations. In respect of deposits, an eligible depositor is entitled to claim up to £85,000. For joint accounts this may be £85,000 each, making a total of £170,000.

Treating customers fairly

Fairness underpins our ethos towards new and existing members and as member owners of the Credit Union we encourage your active participation. Your interest, views and opinions matters to us, as they help shape and introduce changes which will deliver real benefits for all members.

We continuously demonstrate this policy through our risk assessment procedures, the exposure of loan defaulters, and we also implement polices to reflect the changes in anti-money laundering practices and procedures.

If you have any queries or views, or if you feel you have been treated unfairly with any aspect of our service, please do not hesitate to contact us with your comments. We can be contacted directly on 0131 474 8003.

How you can help the Credit Union

You can help us simply by being an active member, saving and borrowing sensibly and regularly, and acting as an advocate for the Credit Union by encouraging others to see the advantages and join. Success for your Credit Union and the development and introduction of new features and services will come as the SCVO Credit Union expands in size and penetration throughout the voluntary sector in Scotland. Your help in that process will be invaluable.

In time, you will also be encouraged to stand for election to one or more of the governing committees. All successful organisations depend on a full participation by their membership and the SCVO Credit Union is no different – we will have to ensure rotation of our committee membership and replace those who have retired or resigned.

Willing volunteers are always welcome and the tasks are interesting and educational. Please give serious consideration to standing for office and contributing to a vibrant future for the SCVO Credit Union.

Passing on other customers

The SCVO Credit Union savings and borrowing benefits can be enjoyed by your work colleagues and family members. (Family members need to be over 18 years old and living at your home address).

Please do not hesitate to pass our contact details to your work colleagues and family members, and we will then send out membership application forms directly to them. You can contact us directly on 0131 474 8003.