Credit Union keeps multi-million pound “bankers bonus” in the local economy as it reaches 25-year milestone

Picture show members of the HEY Credit Union team at the head office in Hull. From left: John Smith, Matthew Stevens and colleagues Maya, Sherilee and Cathi.

An organisation set up to help families in Hull manage their finances estimates it has saved members across the region a staggering £25m in interest charges during the quarter of a century since it was launched.

HEY Credit Union – which was founded by a small group of Hull City Council colleagues in 1999 and now operates across the Humber region – has also returned £1.6m in dividends to its savers.

John Smith, HEY Credit Union’s Governance Officer, said: “In a commercial bank, that money would most likely have lined the pockets of corporate investors or global hedge funds or ended up as ‘bankers bonuses’ for highly paid managers and directors.”

Feedback from the 18,000-strong membership indicates they place a high value on the efficiency and flexibility of the service and see HEY Credit Union with its not-for-profit co-operative approach as a fairer alternative to savers and borrowers.

Matthew Stevens, Chief Executive of HEY Credit Union, said: “The cost of living crisis has brought more people to us as they regard us as a trusted local alternative to high street lenders. They seem to like the friendly service and the fact that we are working for them and not trying to make money out of them.”

Since HEY Credit Union was founded it has outgrown a tiny office in the Guildhall and  now has its own headquarters in Brook Street in Hull city centre. 

The aim from the outset was to provide safe savings accounts and competitive credit facilities that help people to afford their lives, build financial resilience to withstand hard times and manage their money wisely.

Most of  the services are online, but as the major banks have reduced their physical presence in towns and cities HEY Credit Union has strengthened its commitment to retain a visible presence in key communities where people can access face to face enquiries, transactions and support. It now operates branch offices across the Hull and Humber region in Bridlington, Goole, Scunthorpe, Grimsby, Driffield and Withernsea.

John was one of 21 founder members in 1999 and served as Chief Executive until stepping down in 2023. He recalled that, at a time when Kingston Communications was being floated on the Stock Exchange, many of the early low-cost loans were to people who wanted to buy shares in the much-loved organisation.

John said: “We had heard great things of financial services co-operatives called credit unions being set up in other cities and we wanted to provide our colleagues at the City Council with easy ways to save, access to affordable loans and other handy services to help them manage their money better.

“It was very exciting when we received our registration certificate from the Registrar of Friendly Societies on June 10, 1999, and were able to open for business!”

Since then HEY Credit Union has issued 81,310 loans to a total value of £59,018,666.  The biggest spend has been just over £14m on home improvements, which have accounted for 15,975 loans. 

A total of £8.8m was spent on cars, caravans, cycles and motorbikes, just over £6m was borrowed to spread the cost of a holiday and £5.8m was used to buy furnishings, domestic appliances and household goods.

Other reasons for borrowing have included computer equipment, clothing, school uniform, vets fees, legal fees, family celebrations, bereavement costs, bonds and rent, paying off a mortgage and consolidating debts to reduce monthly outgoings.

Christmas has been one of the biggest spends over the years with the issue of 16,467 loans worth a total of £8,165,389. A Christmas Saver account, which lets members lock funds out of temptation’s way until the festive season, was introduced at the request of members and is believed to be the largest Christmas Club in the Humber Region, with around £1 million saved into it each year.

The HEY Credit Union board has calculated that its members have saved at least £25m in interest charges by coming to them for affordable loans instead of dealing with doorstep lenders and other high cost credit providers.  

John said: “Added to the dividend, HEY Credit Union has therefore pumped at least £26.6m back into the regional economy, demonstrating the power of co-operative enterprise to make a significant social impact.”

Businesses and other organisations are also supporting HEY Credit Union with the introduction of payroll partnerships, under which more than 30 employers provide their workforce with direct payroll deduction for savings and loans. 

Matthew said: “This has been a growth area because payroll deductions, before a wage or salary hits the worker’s bank account, are proven to be the best way to start and maintain a savings habit which builds financial resilience, enabling the saver to withstand the shocks of unexpected bills, loss of income, ill health and adversity.”