700,000 Members And Growing Fast
The Age
Monday October 16, 2000
CREDIT unions are enjoying massive growth. In the year to June 30, 2000, credit union membership grew steadily to total slightly more than 3.5 million and assets jumped 8percent to $21.5 billion.
Reinforcing this growth pattern was the increase in total loans to more than $18 billion at June 30, with the annual rise steady at 11percent over the past three quarters. Housing finance balances were more vigorous, jumping 15 per cent in the year.
In Victoria, membership reached nearly 700,000 while assets grew seven per cent to $3.5 billion in the year to June 30, 2000. Total loans outstanding stood at almost $3 billion, an increase of 14percent compared with the previous corresponding period. Housing finance balances rose 21percent in the year.
At a time when banks are suffering from public opprobrium, credit unions continue to go from strength to strength, utilising their financial cooperative status in which they are owned and democratically operated by the people who save and borrow with them.
What does this mean in practice? People joining a credit union are asked to buy a share for a nominal amount, usually between $2 and $10. This entitles them to an equal say in the running of the credit union, having the right to vote at annual general meetings and electing directors. Members can also stand for the board. Each member has one vote, regardless of the amount of business he or she has at the credit union.
Surveys show credit unions consistently outperform banks in surveys of customer satisfaction. This is not surprising when their business philosophy aims to:
* Give members a sense of belonging.
* Protect members from financially over-extending themselves.
* Ensure members have the capacity to repay loans.
* Encourage members to stand for office.
* Provide members with accurate and relevant information on the credit union.
* Respect members' privacy.
* Ensure members have reasonable access to services.
* Minimise members' exposure to risk, and act with prudence and in the long-term interests of members.
Banks have a different structure, ownership and purpose to credit unions. The primary motive of a bank is to make profits for shareholders. But the shareholders and customers of a bank are usually different groups of people with different objectives.
At a credit union, however, there are no external shareholders influencing decisions. Credit unions are owned by members for members and boards reflect the members' will.
This ownership structure does not prevent credit unions offering a wide range services. They include savings accounts, cheque accounts, term deposits, access to an ATM network, debit cards, Visa cards, direct pay, personal loans, home and home-improvement loans, retirement advice, approved deposit funds, superannuation, financial advice and personal and household insurance.
Remember, however, that details vary between credit unions because they are autonomous institutions, free to set their own policies on products and services, interest rates and charges.
CREDIT unions, which have been operating in Australia for more than 50 years, argue that because they provide financial services to people - not corporations - the nature of their business is less risky than that of banks. In addition, they carry capital relative to their assets that is above what the banks do.
Introduction of the Australian financial institutions scheme in 1992 boosted the acceptance of credit unions as mainstream financial institutions. Under the scheme, the Australian Financial Institutions Commission (AFIC) protects the interests of credit union members and promotes the financial integrity and efficiency of credit unions. (The AFIC is a government organisation that regulates credit unions in much the same way that banks are regulated by the Reserve Bank.).
It is easy to join any of the 255 credit unions with their network of 2000 branches and agencies.
The strength of the credit union movement reaches most parts of Australia. In many rural and remote areas, local communities are now turning to credit unions to fill the void left by the closure of bank branches.
© 2000 The Age