Flexibility & trust the key to a relationship with Naas Credit Union

For the best part of 50 years, Naas Credit Union has played an important role in managing the finances of its members around the North Kildare region. It opened its doors in the 1960's to become the biggest personal lender in the area today with close to 20,000 members on its book. But what's the key ingredient for its success? According to manager Sean Murray, it's their flexible approach to doing business.

With the banks virtually closed for personal lending business and one of the Credit Union's rivals, Halifax vacating 23/24 South Main Street from June 18th, the options once available to clients have all but vanished. With that, Naas Credit Union has an opportunity to take advantage of a situation, yet it still remains the most competitive lender in the town. In saying that, there is one obstacle; you are required to have a certain level of shares in your account, with the minimum being €6.35 before being granted a loan. However while saving up first might be necessary, it's more important to have a relationship with the Credit Union. "We offer people good value on savings and loans.' says Sean. Not only that, but the Credit Union has been trumping their rivals on loan rates consistently. But even with this, the Credit Union was never able to compete against the practices of banks in handing out the cash so easily - but the times, they-are-a-changin.

What have been the main changes since Sean took over in 2006?

Firstly, Naas was never willing to compete with their main rivals in handing out cash so easily and similarly, clients were not all that rate sensitive. Secondly, the thought of having to save up before taking out a loan went against that widespread availability of credit available from the banks. That has all changed more recently. Credit has dried up through the collapse of the Irish banking system. As well as that, there are over 17,000 on the live register in Kildare compared to just less than 5,000 for the same period in 2006. So how do you lend in this environment? "Repayment capacity has become a lot more important than lending based on your salary' says Sean. "We look at every individual's circumstances and make a call based on this information and their history with us'.

There is one sting in the tail for some clients that look for a loan from Naas Credit Union however. Up to two years ago, Naas Credit Union was not a member of the Irish Credit Bureau (ICB), (an organisation that makes your credit history available to lenders and other financial institutions) but like many of Sean's Credit Union counterparts, Naas has joined the ICB in more recent times. While it's not necessarily an impediment to doing business it will throw up your credit history which was never available to the Credit Union before. The benefit of the ICB according to Sean is that "it allows a lot of people who have excellent histories with the Credit Union get that history recognised by other financial institutions'.

Sean Murray doesn't believe this has an adverse impact on lending. "It's about the relationship with our clients. It's an organisation owned and operated by its members, and with that comes a sense of community and trust on both sides'. But can trust be counted on when somebody is desperate to get a loan? "While the ICB is one tool available to us, certain institutions don't report various debts and because of that, the ICB can only capture a certain level of indebtedness and that's why the Credit Union looks at every member's unique circumstance'.

Different to banks

Banks operating in Ireland over the past number of years have left the public angry and frustrated by complete disregard for clients, regulation and lending practices. What sets the Credit Union network aside from all of this? They are still under a regulatory framework comparable to the main street banks, but in a nutshell it comes back to two things - a sense of community and consistency in lending. There are approximately 500 Credit Unions scattered around the country. In turn, each one is a member of a regionally based chapter. While the Credit Unions are still independent of one another, their ethos as a community based organisation remains the same under the umbrella of the Irish League of Credit Unions.

Structure

Sean Murray and his staff run the Credit Union on a daily basis, with the organisation overseen by a voluntary board of directors & supervisors. The board and supervisors are directly elected by their members at the AGM, and all other committees are then filled internally. This feeling of jobs-for-the-boys on the boards of the banks does not correspond with the Credit Union structure. Responsibility and authority to elect the Board lies in the hands of each member of the Credit Union - accredited members with a minimum of €6.35 in savings have a vote at the AGM. Because of this, members can have a real input into the running of their Credit Union.

All that being said Credit Unions are not immune from losses or making mistakes. The biggest difficulty facing Naas Credit Union in the current climate is maintaining their existing loan book. Provisions for bad debts have been increased to mirror the climate. Is there anything people should do if they find themselves getting into difficulty with repaying debts? "It's important to be realistic when looking at your finances. Talking to creditors and setting out your position in a letter it a first step. It may be necessary to take hard decisions, but we'd always encourage people to be clear about their debts and take action without delay' says Sean.

The future

The Regulator issued very prescriptive guidelines in September 2008 for any future investments made by Credit Unions. All investments must be 100% capital guaranteed and no more than 25% of Credit Union funds can be placed with any one company. New guidelines were also issued whereby Credit Unions are required to maintain a reserve ratio of no less than 10% of total assets.

Does this make much difference to the end user? It should. We have seen what happens when our banking partners turn their backs on us. The complete lack of access to credit has forced many businesses to close their doors in the past few years, has puts considerable pressure on households and has forced many Kildare people into a more precarious situation. What have the banks done to reward our loyalty over the past few years? NOTHING. Naas Credit Union on the other hand has been a friend to one and all over many years and deserves our support in the future.

Asked where Naas is going in the future, Sean believes there is "a major change in people's attitude to value and members are becoming more aware of the value available from the Credit Union.' The biggest challenge is not necessarily managing the climate, but "getting the message out about what we do. We've all been through difficult times before and we'll come through them again'.

Naas Credit Union, 045 879622.