We are pleased to announce we are now members of the Scottish Financial Enterprise.
This is an important association for our growing organisation and recognises the great effort by our leadership team to move forward in the mutuals sector.
Castle Community Bank, based in Leith, has received £1 million investment from Social Investment Scotland.
The growing credit union received the £1M sub-ordinated loan to support their growth and ambition to be a business of scale providing ethical and affordable loans and excellent returns for savers.
Chief Executive Adrian Sargent
Castle Community Bank Chief Executive Adrian Sargent said:
“I’m delighted that Social Investment Scotland has confidence in Castle Community Bank and has invested £1M. This fantastic investment will reap benefits for not only our organisation but also the communities and members we support in Leith and beyond. This is another important step in our journey to grow the credit union sector and promote financial inclusion in the UK.”
Social Investment Scotland Head of Investments Chris Jamieson, said:
“We’re very happy to be supporting Castle Community Bank and its ambitious programme of targeted growth, which will positively impact people in Leith and the surrounding area. We see the important role that credit unions play in building a wellbeing economy, particularly when many individuals and households are struggling with the rising cost of living. That’s why we are committed to supporting organisations such as Castle Community Bank, who are providing fair and affordable access to finance for the people and communities who need it most.”
About Castle Community Bank
Castle Community Bank is different to other UK credit unions because it is able to offer savings and loans to members across the UK rather than just one region or profession. Savers who want their money to do good can typically benefit from top tier interest rates, while enabling the bank to make affordable loans available to those who need them. Castle Community Bank uses innovative fintech outsourcing to unlock greater scale and efficiencies, thereby helping more people across the country. And because the bank is not-for-profit, any surplus generated is invested into products for members and community initiatives.
Castle Community Bank’s credit union objectives:
As the cost-of-living crisis continues for struggling communities across the nation, credit unions can step up and support those in need.
The role of credit unions then has never been more sharply in focus
Chief Executive at Castle Community Bank, Adrian Sargent says:
“The cost-of-living crisis continues, and more and more struggling families will have no choice but to turn to lenders to make ends meet. The role of credit unions then has never been more sharply in focus. As the economic fallout from the pandemic, Brexit and the war in Ukraine continues to squeeze the finances of disadvantaged communities, credit unions must be there to soften the fall with affordable lending and financial education.
“With the welcome decline of payday lenders in the UK market, credit unions and non-profit community lenders must plug the gap. Fears that illegal loan sharks might see an opportunity in the current crisis aren’t without weight. According to the Centre for Social Justice, the thinktank co-founded by the former Conservative leader Iain Duncan-Smith, more than 1 million people are now using illegal lenders in England. Others are turning to unregulated but legal forms of lending, such as buy now pay later schemes run by firms Klarna, Clearpay and Layby. Often these schemes don’t charge interest, but people are still at risk of debt by overextending themselves, with the schemes encouraging over-consumption of borrowing.
“Research released by Barclays Bank and the debt charity Stepchange* in June found almost a third of buy now pay later borrowers said their loans had become unmanageable and had pushed them into problem debt. The same report showed that 4.4 million people in the UK borrowed money to make ends meet last year. With 71 per cent of those surveyed sharing that using credit had negatively affected their health, relationships, or ability to work. Two thirds said they were only able to keep up with payments by skipping housing or utility bills.
“Non-profit social enterprises lent only £34m in 2021, with around 67,4000 customers last year. Despite their recent decline, payday lenders still managed to lend about £60.4m in the first quarter of 2022, according to the FCA, while home-collected creditors lent about £95m in the final three months of 2021. We are seeing a welcome increase in the number of people using credit unions, with membership now above 2.1 million. Castle now has c14,500 members across the UK and total assets of c.£82m. But we can do more, and we must work with the sector and our partners to develop products and services to reach these individuals and help them improve their debt management and help them get out debt and over time turn them from borrowers to savers.
“I attended the World Credit Union Conference in Glasgow earlier this year. An impressive 1600 credit union professionals, from 51 countries, came together to hear 30 keynotes from more than 50 speakers. Topics ranged from digitalization, cybersecurity, regulation and advocacy, financial inclusion and education, diversity and equity, business strategy and influence and sustainable finance. It was a great opportunity to discuss how credit unions can make a difference and share best practice from an international collective. My takeaways from the conference are that – specifically in the UK – the sector has so much potential to grow, and therefore help even more members. Support is required from investor, regulators and the government to allow a regime that promotes growth, so the sector can truly add value and catch people who fall out of mainstream banking, or are already financially excluded.
“Like any Credit Union, Castle Community Bank is not for profit and is owned and run by members, creating a shared financial community across the UK. Any surplus revenues from running the business is ploughed back into its member communities, starting in Leith.”
*https://www.theguardian.com/business/2022/jun/23/buy-now-pay-later-uk-research