13 January 2016

BHCC Seeks to Strengthen City's Credit Union Services

Brighton & Hove City Council is to consider becoming a corporate member of East Sussex Credit Union (ESCU).  The move would include loaning the organisation £250k to expand its services to more of the city’s most financially vulnerable residents.

The not for profit organisation currently offers affordable loans, debt management advice and savings accounts to those who are excluded from mainstream lenders for reasons associated with financial hardship such as having a poor credit rating, and seeks to reduce reliance on high cost payday lenders.

The loan would mean a larger variety of products being available to a wider range and number of individuals and benefit an estimated 2,500 households over and above the current 3,854 Brighton and Hove residents in the ESCU membership.

The proposal will be discussed at the council’s policy and resources committee meeting on 21 January 2016.  Should it be given the go ahead, the £250k loan would be funded from reserves and be payable in full at the end of a five year and one day term.

Other councils in England that have provided subordinated loans to their local credit union include London Borough, Haringay, Islington, Worthing and Adur.

Cllr Emma Daniel, chair of the Neighbourhood, Communities & Equalities committee, who supports the proposal, said: “This administration has pledged to tackle inequalities in the city and those experiencing financial hardship are among the most disadvantaged.

“The ESCU has reached its limit in terms of the size and number of loans it can offer and with the ongoing impact of welfare and public sector funding reform the city is expecting to see more and more people facing financial vulnerability.

“By investing in the ESCU, the council would be providing an effective financial resource that is directly beneficial to the communities of Brighton and Hove.”

ESCU has provided small loans from £100 to £15,000 to people who struggle to access traditional financial services and its loan rates are much lower than doorstep lenders, typically over 200% lower APR than well-known providers.

Notes for editors

East Sussex Credit Union (ESCU) is a local savings and loans co-operative. It started in 2000 as Brighton East Area Credit Union and became ESCU in 2008. The Credit Union currently serves those who live and work in Brighton and Hove, East Sussex and has an arrangement to provide services to Unite members in the South East Region.

ESCU is a mutual – a not for profit organisation which aims to provide high quality, sustainable and easy to access savings and loans. It responds proactively to the needs of its members and works to combat the detrimental effects of poverty and financial exclusion.

ESCU is regulated and authorised by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) and savings are 100% guaranteed by the Financial Services Compensation Scheme.  It is owned by its members who all live or work in Brighton and Hove and East Sussex. As of September 2015, 3854 (73%) of its 5279 members are Brighton and Hove residents.