Logistics Guild Credit Union
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Logistics Guild Credit Union

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Skills for Logistics and The Logistics Guild is developing a Credit Union specifically for people who work in the UK Logistics Sector.

Skills for Logistics and The Logistics Guild is developing a Credit Union specifically for people who work in the UK Logistics Sector.

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Logistics Guild Credit Union Logistics Guild Credit Union Presentation Transcript

  • PRESENTATION The Logistics Guild Credit Union
  • 3 The Logistics Guild is developing a Credit Union specifically for people who work in the UK Logistics Sector. Every credit union has a membership test which determines who can become a member. Being a part of the Logistics Guild, members will have the right to join the Logistics Guild Credit Union and take advantage of its ethical product range including savings products, ISAs, current accounts and loans. Loans can be for personal training, learning and career development and other purposes. The money deposited by savers helps provide fellow members with access to loans. As a not-for-profit financial cooperative, the income made from the interest charged on these loans pays savers interest and some surplus profit may be used to fund educational bursaries.
  • 4 The credit union concept has the support of Skills for Logistics, the UK government and leading employers within the logistics industry. Logistics employees can access the credit union by being members of the Logistics Guild. The Guild offers training and development programmes, member benefits (e.g. discounts at retailers) as well as the chance to join the credit union. Guild membership is free. Employees can borrow loans from the credit union at rates below those offered by banks, building societies, Wonga and other doorstep lenders. Loans are unsecured. The Logistics Guild Credit Union’s (LGCU) lending rates are lower because it is a not-for-profit, ethical lender which is owned by its members (corporate and individual). The UK Government (Department of Business, Innovation and Skills through the UK Commission for Education and Skills) has already committed £1.29m and major logistics corporates have provided £600,000 of capital. THE LGCU will be regulated by the FCA/PRA and retail deposits will be protected by the FSCS scheme up to £85,000.
  • 5 Logistics in the UK employs over 2 million people but many of these people are young and low paid. Government research shows that literacy and numeracy is low in the sector. The Government is keen to promote credit unions as research shows too many people on low incomes are paying too much in bank charges. Moreover, banks and building societies have largely withdrawn from personal lending leaving many people dependent upon pay day loan companies, doorstep lenders and companies like Wonga.com who charge between 1,500 and 4,000% p.a. Whilst loans may be used for any purpose, the LGCU will be promoting their use for training courses, helping workers to improve their career prospects, raise their self esteem and take responsibility for improving their career outlook.
  • 6 Increased training activity provides more skilled workers for the future and improves the reputation of your company. For employers, including LGCU loans in their training programme could: o Increase the number of apprentices (18+ yrs) where there is low or no Government funding. o Alleviate the pressure on training budgets and increase the scope of what can be offered. o Improve staff retention. If staff leave the employer, they take the loan with them. o Help improve job satisfaction, lowering rates of absenteeism and recruitment costs. An employer may have a balance sheet cap on what it can lend on employee loans but the LGCU has no cap on the number of loans lent. o Employers may want to expand their social inclusion strategy to help the long term unemployed and address high youth unemployment. o Larger employers may wish to offer development opportunities to their subcontractors where individuals in these companies could take out training loans. Increase productivity where research shows productivity gains outstrip wage increases. o o
  • 7 LGCU loans can be made for pre-employment training* or to apprentices or employees looking to upskill and develop their careers. Specific logistics qualifications such as: Importantly, loans can be made where there is no Government funding and where banks are reluctant to lend. *As part of an approved scheme o LGVs: Practical and theory tests. Logistics Certificates and Diplomas. o 2nd degrees and MBAs in Logistics Supply Chain, International Trade and Transportation. o Shipping Certificates and Diplomas. o 2nd degrees in Maritime Business, Ship & Port Management and the Environment and Shipping Logistics. o CIPS Procurement and Supply Chain Qualifications. o Operations and Business Management. o Loans can also be offered for everyday items such as buying a car to get to work, washing machines, school uniforms or family holidays. Pre-employment training. o Loans can be made for specific training in logistics or any work related field such as HR, accountancy, finance, procurement, Health and Safety etc. o Humanitarian Logistics The LGCU will work with a broad range of training providers and professional bodies across Great Britain.
  • 8 The LGCU’s products are fairer to the employees than those of a bank or doorstep lender. o Products have no arrangement fees or early settlement charges. o Life cover to repay loans is offered at no extra cost. o CUs actively encourage saving and offer information on how to budget finances o CUs are more reasonable in their negotiations with individuals when they get into arrears, looking to help them resolve their financial difficulties rather than see them as a profit opportunity.
  • 9 Typically, the Sector operates on low margins. To develop and fully realise career potential, the LGCU can offer real benefits and opportunities. Market research* tells us: o 60% of the workforce are under the age of 34 and 57% do not own their own homes. o 65% of regular savers and 71% of irregular savers would consider opening a savings account with the LGCU, subject to competitive rates. o 30% of employees expect to take out a loan in the next 12 months for up to £2,000 with repayments over 3 years. * Survey by Logistiqa on 30 logistics companies.
  • 10 We are asking prospective Sponsors to provide one or more of the following: o Make a gift to help with the LGCU’s capitalisation. o Provide subordinated debt or equity where you would receive a market return on your investment. o Provide senior loans or deposits at competitive market rates to fund the LGCU. o Permit access to your employees and/or your subcontractors to promote the LGCU and it’s benefits. o Allow payroll deduction for your own employees who wish to take out loans.
  • 11 As a founding member of the LGCU, a sponsor will enable its own employees and those of its subcontractors to borrow funds for training (and other purposes). A sponsor will demonstrate social responsibility by supporting an important new initiative which helps protect lower paid logistics workers from financial exploitation by high interest rate lenders and improves access to education by creating bursaries. Governance of the highest standard is ensured through professional credit union staff, an industry board, monthly reviews and reporting to SfL and the UKCES and supervision by the regulatory authorities.
  • 12 The content of this presentation is issued and approved by Promethion Limited (“Promethion”) which is authorised and regulated by the Financial Conduct Authority (the “FCA”) for the provision of investment advice to persons who can be categorised, in accordance with the FCA’s rules, as “professional clients” and “eligible counter parties”. The Firm does not provide investment services to retail clients and such persons should not seek to use or rely on any information provided in this presentation. The information contained herein does not constitute an offer to sell or the solicitation of any offer to buy or sell securities and or any derivatives and may not be reproduced, further distributed or published by any recipient without prior permission from Promethion. The information and opinions contained in this presentation are for background purposes only and do not purport to be full or complete. Nor does any content within this presentation constitute investment advice. No representation, warranty, or undertaking, express or limited is given as to the accuracy or completeness of the information or opinions contained in this document by any of Promethion, its directors or employees and no liability is accepted by such persons for the accuracy or completeness of any information or opinions. Promethion is not registered as an investment advisor with the SEC and therefore this document is neither directed at nor intended for US investors.
  • How a Credit Union will benefit Logistic Guild Members
  • 14 Zoe Shaw, Managing Director of Promethion Ltd, the company behind the new Logistics Guild Credit Union (LGCU) explains how the new credit union will benefit Logistics Guild Members. What will the main outcome of the LGCU be? Like all credit unions it will be a not-for-profit financial cooperative owned and controlled by its members. We hope that people will be able to use the credit union to take out small loans to fund training, which will help further their careers, as well as being able to take out loans for household items. What does this mean for businesses? So far some major logistics employers and trade associations have pledged to support the LGCU. Next we need to secure additional funding. Employers are an integral part of moving forward and a lasting solution. Employers can also be represented on the LGCU board which will protect the interests of both employer and employee. So who can use the LGCU? To use the LGCU you will have to be either working or training within the Logistics Sector. In addition to this you have to become a member of the Logistics Guild. To register for this is absolutely free. Being a member of a credit union for your industry ensures that your interests are specifically looked after. The financial support offered by the LGCU include; better rates for savings, loans and information on financial best practice, free life insurance on loans, Christmas clubs and savings schemes. The philosophy behind this credit union is to help people. I hear that credit unions are “ethical lenders” what does this mean? Credit Unions are controlled by law with respect to how much interest they can charge (a maximum currently of 2 % per month). They often charge less than this and lend at rates more competitive than credit cards and much less than doorstep lenders and payday loan companies. As credit unions are notfor-profit organisations, any profit made by the credit union after expenses at the end of their financial year may then be paid back to the members in the form of an annual dividend on their savings.
  • 15 What is the philosophy of a Credit Union? What amounts can people borrow and on what terms? Credit unions believe in “people helping people” and are often run partly by volunteers. When borrowers are unable to repay in a timely manner they try to help people to get out of their debts rather than seeing people as a profit opportunity. However, they are commercial and must make a profit and will not lend without making credit checks. We will be offering loans for between £1,500 and £5,000 for 3 years – there is very little interest from clearers to lend these smaller amounts. We hope after a few months to offer a payday loan product with very competitive terms in comparison to entities such as Wonga.com for amounts of £500. What other products will the credit union offer? Why save with the LGCU? Through convenient and simple payroll deduction you can make monthly or one off lump sum deposits into savings accounts which have competitive returns. These accounts offer instant access and online account management. Any loan you take out will be protected by ‘free’ life insurance so that if you die the loan will be paid off in full and not represent a problem for your family. The LGCU’s core product range will include regular savings products (ordinary share accounts and ISASs) and unsecured loans. Other lending products may subsequently be developed as the membership grows, including pre-paid debit cards. We will also look to offer insurance and vehicle finance in partnership with major providers in due course and offer a lottery to raise money to train members. Will there be a branch network? Is my money protected in a Credit Union? Yes it is protected by the Financial Services Compensation Scheme which provides 100% protection for up to £85,000 shares per individual member or junior’s savings just as with a UK bank or building society. The LGCU will be regulated by the Prudential Regulatory Authority (“PRA”) , subject to Money Laundering Regulations and registered under the Data Protection Act to ensure members’ information is kept confidential. The services will be delivered through a modern internet platform with telephone and mobile banking options. It is believed this is appropriate for a younger client-base which may be on the move and does not want an inflexible branch-based structure. Given the projected geographical spread of members across the UK this is the most practical arrangement.
  • 16 How will you actually market to our staff? We will work with HR teams to design the best approach which suites their organisation. This could include articles in in-house magazines, email contact, banners on pay roles advertising the LGCU’s loans and trade and internet advertising. In the longer term a designated in house contact person could act as a focal point for members on a volunteer basis. Why have I not heard much about credit unions before? The UK is an under developed market for credit unions. By comparison, in North America 45% of the US and Canadian population bank with credit unions, 65% in Northern and Southern Ireland and 40% in Poland. The UK Government is keen to encourage the growth of credit unions in the UK and is working with the trade body, ABCUL, to promote saving and lending through credit unions.