Helping residents manage their money
Hertfordshire Housing Conference
Tony Bailey
Chairman
HertSavers Credit Union
April 2013
Helping residents manage their money
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What is the problem?
Likely Consequences
Solutions
Why use a credit union?
Who will need help to adjust?
Potential new credit union services
Risks and Unknowns
Costs and Partners
Questions
Social Welfare Reform = Radical Change
Housing Benefit
Employment Support Allowance
Tax credits
Disability Living Allowance
into Personal Independence
Payments
And then there is Universal Credit …
Universal Credit: resident’s challenge
• replacement for most working age benefits
• a single monthly payment for a household
• a basic amount - paid in arrears
• plus amounts for children, disability, housing and caring
• single rate of withdrawal when a person enters work
• digital by default
• new sanctions for fraud and error
But we may see some backtracking on the details as the system is
rolled out:
Pathfinder April 2013
Rollout for new claims October 2013 to April 2014
Rollout for existing
April 2014 to 2017
Impacts on Tenants, Social Landlords and Councils
• Residents to budget and manage money monthly
• Reduced benefit income to be replaced by earned income
• “No losers at point of change” but frozen benefits
• Comparative losers – people making new claims or changes
• Clearly designed to reduce the bill for social welfare over time
• Potential for increased level of rent arrears
• Potential for increased level of Council Tax arrears
Some mitigation by Discretionary Housing Payments
and Hertfordshire Welfare Assistance Scheme
Ways of managing money monthly
Banks
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Think Banking
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RBS
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Others
Prepaid Cards
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Allpay
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CredEcard
Credit Unions
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JamJar Accounts
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Current Accounts
“If you don’t take care of your money,
who can you trust to help ?”
Why use a credit union?
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Social enterprise – not for profit co-operative
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Trading surpluses go back to residents
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Scope for members and partners to shape services
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Residents more likely to receive a sympathetic service
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Provides employment for staff within the county
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Improves sustainability of credit union services
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HertSavers CU serving Welywn Hatfield since 2001
and Hertfordshire since 2009
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Approximately 1100 members
Two offices: Hatfield and Waltham Cross
Open 23 hours a week
There are already over 5000 credit union members in the
six credit unions in the county
Who will need help to adjust?
DWP suggest claimants will fall into one of four groups:
Independent
Light Support
Intensive
Support
Exceptions
Able to budget
Able to budget
with short term
support
Only able to
budget
with ongoing
support
Never able to
budget
(20%)
• 1 million people use a PO account with no transactional banking
• 1.4 million people have no bank account
• 2 million have accounts with failed direct debits
• 850,000 have accounts with regular failed direct debits
Potential new credit union services
Independent
Light Support
Intensive
Support
Exceptions
Able to budget
Able to budget
with short term
support
Only able to
budget
with ongoing
support
Never able to
budget
(20%)
Credit Union
Current
Account
Credit Union
Managed
Payment
Service
DWP
Regular Bank
Account
(CUCA)
Exceptions
process
Credit Union Managed Payment Service
• Wages and Benefits paid into CU bank account
• Automated allocation of credits to member accounts
• Member Agreement to provide list of payees
• Automated payments to payees
• Rest allocated to saving accounts and/or Prepaid VISA card
• Electronic remittances to payees and emailed Remittance Advice
• Standard use of Prepaid VISA card like all VISA debit cards
• HertSavers CU already has the software
• Supplier workshop for feedback from trials in April
Controlled payment of
rent, council tax etc while
member adjusts to system
Managed Payment Service Implementation
Credit Union Current Account (CUCA)
• Cash withdrawals at any Link ATM machine
• Direct Debits + Standing Orders - no cheque book
• VISA Debit Card used as any other VISA Debit Card
• Instant access to electronic credits: wages, benefits etc
• No unfair charges – only reflecting actual costs
• Own Sort Code/Account Number
• Improved service for members who cannot visit the CU office
• Exists already in use in some credit unions
The benefits of a current account
for members who are better able
to manage their money
CUCA Implementation options
Risks and Unknowns
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Possible changes to UC proposals from trials etc
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Length of time before reversion to direct payments
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Delays to UC computer projects
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Numbers of residents taking up the services
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Speed of rollout (if problems emerge)
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Size of increase in arrears
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CU capacity to manage the workload
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Any change from 2015 election
Is a big bang approach wise at this stage?
Costs: Part 1- Managed Payments
Set up Costs £6,500
• Project costs approx £5,000 + equipment £1,500
Annual running Costs £23,000
• Staff £19,600 (based on 25 hours a week)
• Experian/Cards/Stationery £3,400
Transaction Costs (volume dependant)
• Allow £40 per account per annum
Cost to partners (10)
• £650 setup then £2,300 pa running costs until breakeven
and £5 per account per month (paid by partner for resident)
Costs: Part 2- CU Current Account
Set up Costs £40,000
• VISA Joining Fee €10,500
• Project costs approx £28,000 + equipment £2,000
Annual running Costs £27,500
• Staff £15,500 (based on 20 hours a week and Pt1 in place)
• Experian/Cards/Stationery/ADSL £3,000
• Service Desk/Fraud monitoring etc £9,000
Transaction Costs (volume dependant)
• Allow £40 per account per annum
Cost to partners (10)
• £4,000 set up then £2,750 pa running costs (until
breakeven) plus £5 per account per month (paid by partner for
resident)
Partners and interested parties
• East Herts District Council
• B3 Living
• Welwyn Hatfield Community Housing Trust
• Dacorum Borough Council
• North Herts Homes
• Riversmead HA
• Broxbourne Borough Council
• Stevenage Borough Council
• Hightown Praetorian CHA
• Howard Cottage HA
We still need more partners …
Timescales
Part 1 – Managed Payments
• Recruit and train staff member
• Test systems
• Launch October 2013
Part 2 – CU Current Account
• Supply pre-implementation documents to ABCUL
• Seek membership of VISA International
(Apr/Jul/Oct/Jan)
• Commission Co-op Bank to set up CUCA (6 months)
• Recruit and train staff
• Test systems
• Launch April 2014 ??
Next Steps
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Conclude Partnership Agreements
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Implement Managed Payments
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Submit Application and Business plan to ABCUL
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Apply for membership of VISA
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Initiate CUCA Implementation project
Email : Manager@hertsavers.co.uk
Phone: 01707 269239 or 07545 484268
Questions
Thank you for listening.
Any Questions?
Helping residents manage their money
Hertfordshire Housing Conference
Tony Bailey
Chairman
HertSavers Credit Union
April 2013
Email : Manager@hertsavers.co.uk
Phone: 01707 269239 or 07545 484268
Incoming payments can be automatically allocated to a set of members’ accounts
Landlords/utilities details are stored in a file of Payees that links to members
Agreement made with members to receive Universal Credit & make payment to
their payees. Money leftover is transferred to savings, current or debit card acct.
System produces list of payments to be made and highlights any where
insufficient funds need to be investigated. Then outputs BACS file and emails.