RMT Credit Union - Your Questions Answered
A Credit Union is a financial co-operative owned and controlled by its members. It operates much like a bank receiving deposits from, and making loans to its members. It is in reality nothing more than a group of persons united by a ‘Common Bond’.
In the case of the RMT Credit Union: this ‘Common Bond’ means being a member of the National Union of Rail, Maritime and Transport Workers Trade Union (or its successors).
Who makes all the decisions about the Credit Union?
The credit union is managed by a voluntary Board of Directors, elected by members at the AGM. All members are entitled to stand for election to the Board. The Board has the responsibility to ensure that all the credit union’s statutory, legal and moral obligations are being observed and, above all else, to ensure the integrity and security of members assets.
The Board is assisted in its duties by the Supervisory Committee which performs an internal audit function to ensure that all the systems, procedures and policies are at the same time in place, correct and being adhered to. This acts as an important failsafe in terms of management of the accounts and the composition of this committee is independent from the Board of Directors.
Ultimately, RMT credit union belongs to the members and it is the member’s responsibility to see that the credit union’s affairs are being run with integrity at all times, therefore the AGM is the key mechanism for exercising the democratic principles which direct credit union activities.
When can I apply for a loan?
Members may apply for a loan when they have been saving for at least 13 weeks. This allows new members to build up an early track record of regular savings, no matter how small.
How much can I borrow?
In the first year you can apply up to 3 times the amount you have in savings. After a year you can apply for a loan up to 5 times the amount you have in savings but the maximum loan you can borrow is £5000 plus what you have saved, depending on your history with the credit union. Subject to availability and the Rules and Regulations of the FCA and Prudential Regulatory authorities.
Would I get a loan for anything?
Just like an unsecured bank loan, credit union loans can be for virtually any purpose and would cover all the typical things that people normally borrow for, such as holidays, Christmas, household goods and so on. Many people use their credit union accounts in a way that allows them to borrow two or three times a year to coincide with the sort of expenses that come around at set times annually, such as those mentioned above.
How do I pay savings or repay a loan?
By Direct Debit from your bank account are (28th or 2nd of each month, 4 weekly or weekly).
What does a loan cost?
Interest is charged at the rate of 1.056% a month on the reducing balance (APR 12.68%). Credit unions have the discretion to introduce a rate lower than this. Unlike other conventional sources of borrowing, credit union loans have the added advantage of having the interest rate applied to the outstanding balance – therefore the interest payable reduces in line with the decreasing loan balance. Furthermore, as members are encouraged to continue to save at the same time as repaying a loan, you will see your savings balance grow over the duration of the loan, thus, by the time the loan is cleared you have a greater shares balance which, in turn, puts you in a good position to apply for a new loan.
A further attraction to borrowing from your credit union is the fact you don’t necessarily need to increase your regular commitments, unlike a typical bank loan where you would need to budget for increased expenditure to cover the repayments. For example if you had regularly been saving say £40 per month, you
could take a substantial loan without increasing that amount. Quite simply all that changes is the way in which that £40 is distributed through your account. Approximately £32 would be the loan repayment; the remaining £8 would cover the interest due and you can also make a contribution to your increasing savings balance – no catches!
Who decides about loans?
All loan applications are considered by the Credit Committee, which comprises a minimum of three members. It is the responsibility of this committee to consider all applications fairly and objectively, and in full knowledge of all available information relevant to the request. The decision of the committee is final, but it can refer the application to the full Board if it is unable to make a firm decision (the vast majority of applications prove to be in good order and approval is a matter of routine). Individual members of the committee play no part in decisions about loans in which they may have an interest.
Member’s savings are referred to as ‘share holding’, as all the members of the Credit Union are its shareholders. After the running costs of the Credit Union are met, all profits made are paid back to the members in the form of an annual dividend. The amount of dividend paid is decided by the Board of Directors.
Are my savings used towards my loan?
No – your shares remain in your account and while you are repaying your loan you continue to save. When your loan is repaid in full you will have more shares than when you first took out your loan, augmented by any annual dividend after all FSA requirements are met.
What if I need to take out my savings?
You can get access to your savings at any time, provided that you allow some notice of your intention to make a withdrawal, to allow processing. However, as credit union loans are generally unsecured, you cannot withdraw any share that are acting as collateral for any outstanding loan you have. Any surplus of shares over loan can of course be withdrawn in the normal fashion.
How do I withdraw my shares (where permitted)?
Obtain a share withdrawal form from the Credit Union at Unity House and return it, completed, to the Credit Union. Payment will be made direct to your bank account by BACS.
What if my loan is refused?
All loan applications are considered entirely on their own merits. In the case of a first loan this would largely depend on whether or not the member demonstrated a good record of savings and had been a member for the minimum qualifying period of (thirteen weeks). Subsequent loans would be further dependant upon a clear track record of repaying any earlier loan(s) in accordance with the signed loan agreement and the credit union’s Loan Policies. In the event of refusal the member would be informed of the reason(s) and would be offered the opportunity to discuss alternatives in situations where it was clear to the committee that the member was experiencing financial difficulties. The credit union is in the business of helping members and to grant loans irrespective of the underlying financial circumstances is rarely in the best interests of a member with financial problems. It should be noted however that a declined loan application in no way affects the members standing in the credit union, is not a reflection of the members integrity and does not preclude the member from submitting further loan requests at a later stage. It should also be noted that the vast majority of applications are approved without difficulty, and this is in no small part due to the fact that the majority of members understand the credit union system, and know what is realistic in terms of making loan requests. This is equally helpful both to the members and the committee charged with granting loans.
RMT Christmas savings club and RMT Summer savings club
Savings for Christmas and Summer holidays can be a real headache. Take some of the stress away by saving over the course of the year with us. Christmas savings club paid out in November and Summer savings club paid out in July.
Junior depositors accounts
The account needs to be opened by an existing RMT Credit Union adult member but it can be opened for any child living at the same address. Accounts can be opened from birth, right up to the age of 16. The junior saver must be living at their parent or guardian's address and an original birth certificate must be produced to be able to join.
Non RMT members
Your spouse can now join the credit union as a non-member and have their own account as long as you both live at the same address.
How do I know my money is safe?
There are several safeguards in place to ensure the security of your money. The Governments Financial Conduct Authority and Prudential Regulation Authority, the same body that regulates all providers of financial services in the UK, closely monitors credit union. Credit unions must submit quarterly accounts to the FCA and PRA, as well as annual audited accounts. The FCA and PRA have the statutory power to close, restrict or intervene in the running of credit unions financial affairs. The credit union must satisfy the FCA and PRA at all times that the value of its shareholding is worth at least 100%. That is to say that in the event of the credit union closing down, its members would receive 100 pence in the pound for every share held up to the value of £85,000.00.
Shares are also protected against fraud and theft by a compulsory scheme known as the “Fidelity Bond”. This requires the credit union to make annual insurance payments, free of charge to the members, to cover any losses incurred through any act of dishonesty, as mentioned earlier, it is also the duty of the credit union’s Supervisory Committee to run regular internal checks on all policies and procedures, and, in the event of anything giving rise to potential cause for concern, bring it to the immediate attention of the Board, or other appropriate authority.
Is my business private?
Absolutely. All your credit union affairs are treated in the strictest confidence. Except where required by law, or in the event of the credit union pursuing a member for unpaid loan arrears, the credit union will not reveal any information about you to a third party.
What if I lose my job and can’t pay a loan?
If a member encounters such difficulties all we ask is that they speak to the credit union as soon as possible – provided the credit union is aware of the problem then it is virtually certain that a solution can be mutually agreed. It is only when a problem is ignored by the member that it is harder for the credit union to assist.
It is the policy of the RMT Credit Union to take all possible steps to recover unpaid loans where it is clear that the member is refusing to pay, as opposed to experiencing difficulties and seeking to renegotiate loan payments.
• The dividend paid to shareholders is decided at the Credit Union AGM each year.
• The amount of dividend paid is based on the period of time and amount of money that you have in your account each month.
• The dividend is paid straight to your credit union account (Normally December of each year)
• The maximum dividend paid out on your shares holding is £10,000.00, any shares after £10,000.00 do not receive a dividend
For further advice and assistance – call us on 020 7529 8835. We are here to help and our friendly staff are able to offer advice and guidance on all RMT Credit Union matters.
Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, FRN No 228612