Credit Unions must partner with the prepaid industry in order to respond to the flood of member support needs triggered by Universal Credit; nine out of ten benefits recipients ‘will not cope’ in October
Contis Group is today calling for Credit Unions across the UK to modernise their member support facilities through partnerships with prepaid e-money solutions providers, as a new Citizens Advice study provides yet further evidence of a looming crisis set to befall the sector when Universal Credit is introduced nationwide in October.
Citing a variety of issues relating to budgeting and account handling skills, the study* reveals that nine out of ten benefit recipients will be ‘unable to cope’ when Universal Credit goes live in the Autumn; a situation that will inevitably place huge pressure on the often thinly resourced member support functions in Credit Unions nationwide.
“Once again, it will be the unbanked that will be hit the hardest; there remain vast numbers of Credit Unions that simply don’t have the resources they need to support their members when this crisis hits,” comments Mike Fromant, Managing Director, Contis Group, a leading European e-money institution and provider of credEcardplus, a prepaid card, e-account, budgeting and rewards solution for the unbanked. “Universal Credit is taking everyone online whether they are ready or not, yet many Credit Unions still don’t offer any kind of web based facility to help members manage their budget or make priority bill payments. Fortunately, Credit Unions can outsource these facilities to the e-money industry at no additional cost to them. By doing so they can issue members with an e-account, e-budgeting facilities and a prepaid payment card that will enable them to adapt to the switchover. Many Credit Unions have already taken this step, but there are still hundreds across the country that haven’t, which is cause for grave concern. Without access to a traditional bank account, where else are these people to go?”
The Citizens Advice surveyed over 1,700 of its clients who will start to receive Universal Credit from October and asked them whether they felt they would be able to cope with five possible problem areas – budgeting, monthly payments, banking, staying informed and internet access.
With an anticipated eight million Universal Credit payments expected over the first four years aloneÆ, the uptake of financial solutions designed for low income individuals and those with developing financial skills is set grow dramatically in 2013/14. By adopting solutions like Contis’ credecardplus, Credit Unions are able to provide many of the traditional money management facilities that banks are refusing to offer, like an e-account together with an account number and sort code, which is capable of supporting standing orders, money transfers and benefit payments. By taking this route, members can also benefit from ATM access and worldwide payment acceptance via Credit Union-issued prepaid and debit cards powered by the major payment schemes.
Æ Department of Work and Pensions.