Social Landlords Must Partner With Credit Unions

Published by Graham Tomlin for Credit Union Solutions Ltd in Housing and also in Central Government, Communities, Education, Health, Local Government

Our experience in West London of working with Social Landlords has been both effective and rewarding and has boosted the development of our credit unions in two ways.

First and foremost and the most important benefit of working with a registered social landlord is getting deductions from payroll for their staff. This enables the collection of savings and loan repayments to be undertaken as quickly and efficiently as possible and is far more effective than standing order payments.

Payroll deduction has enabled the recruitment of staff, often with introductory loans, to both boost the membership count and the loan book simultaneously. This has increased income dramatically for Ealing and M for Money Credit Unions who had struggled quite significantly until a year ago. M for Money Credit Union added two significant payrolls last year one was Harrow Council and more recently a local hospital was added to the list which already included Hillingdon Council and Hillingdon PCT.

2010 was also a significant year for Ealing Credit Union which, after years of trying, finally obtained a payroll agreement with Ealing Council, Ealing Homes and Brent Housing Partnership. Subsequently a payroll agreement with Brent Council was added making a total of eight payroll agreements four with registered social landlords.

Secondly our experience has been that where we have a payroll agreement with staff we also get much more effective communications with tenants. I think that this is because once staff see how simple it is to use a credit union and how much better value it represents they feel more confident in recommending it to their tenants.

Many social landlords are also adding much needed financial capability education for their tenants in a move to fore stall increases in rent arrears. Cuts to CAB budgets and the services often provided by Councils means that partnerships between credit unions and landlords are set to become much more productive for both partners.

Hopefully social landlords operating across the whole of the UK will see an opportunity to offer payroll deduction to a number of credit unions rather than an excuse for not allowing any payroll deduction at all.

Across the last ten years we have developed well over 20 payroll agreements with employers most of whom were dragged kicking and screaming into a partnership claiming the cost of payroll deduction as being too expensive. In every case when you talk to payroll managers and staff the real truth emerges and that is that even for a relatively large payroll the cost is virtually nothing. When asked, one payroll manager said.

“There will be a cost for payroll deduction because it will take my staff at least 30 minutes each month to process.”

Balance that against the benefit to the credit union and you have a no-brainer.

Times are tight and they will get much tighter and if credit unions and social landlords do not form effective partnerships they will both be missing a trick and staff and tenants will be the ones to suffer.