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Interview: Rod Ashley

1 Sep 08

Rod Ashley is the chief executive of Scotwest Credit Union and a great enthusiast for a movement which helps the less well off to save and borrow at fair rates

by Robert Outram

Rod Ashley is a CA and chief executive of Scotwest Credit Union, the largest of its kind in Scotland. Credit unions are still little known and little understood.

A credit union is essentially a co-operative institution, set up to enable its members to save and borrow money.

As Ashley puts it: “Our objectives are, first, financial education – helping members to make better use of their money – and secondly, simply creating a group in which ‘people can help people’.”

Above all, Scotwest is about “the facilitation of savings at any level”. Many of its members – though by no means all – are on low incomes and saving even a few pounds can make all the difference.

Ashley adds: “We have members who may be paying in £1 or £2 a week, and that may be a high proportion of their income.”

Like other credit unions, Scotwest pays dividends, not interest. Last year the union’s basic account paid 3 per cent, which is not bad for the equivalent of a basic bank account.

In fact, offering a current account to people in areas of “social exclusion” is itself making a difference. For many people, the alternative might be cashing cheques at a high street “cheque shop” with the high commission rates that entails. Having a current account also makes it possible to set up direct debits and get a better deal on utility bills.

Ashley says: “At Scotwest, we can budget and plan more accurately than many of the smaller credit unions, so we can more accurately predict the dividend we will be able to pay out.”

Scotwest is based in Glasgow and was set up in 1991 by the then Strathclyde Regional Council, initially for the council’s staff – especially the lower paid and part-time employees.

But Ashley stresses: “That has all changed. ‘Quality credit unions for everybody’ is what we are about. We have some members who earn a lot, as well as those who are just saving a pound or two a week.”

He adds: “Our goal is double digit growth in membership which we are on target for – we are looking to grow 10 per cent this year.”

The union has around 21,000 members, with £24m in funds under management. Credit unions must demonstrate a “common bond” restricting membership to a specific group of people (see box, above right), and Scotwest is only open to those living or working in the west of Scotland.

Ashley believes that recent disenchantment with mainstream banking is driving more people to look at co-operative alternatives. He says: “A Northern Rock situation could not happen because the capital structure of a credit union is completely different. People also like the fact that it is local and funds invested stay within the community.”

He explains: “We invest the savers’ funds and also lend to members out of that common pot. About 50 per cent of members have a loan from us – it could be as little as £50 to tide them over to the end of the month, or a loan for a car.

“Our loan rates are highly competitive and we go through very careful affordability criteria when members ask for a loan.”

Credit unions were previously regulated by the Registrar of Friendly Societies but now they come under the Financial Services Authority. Ashley was invited to serve on the FSA’s credit union consultation panel in 2000, in the run-up to the handover, and he serves on the Smaller Businesses Practitioner Panel of the FSA.

Ashley’s first exposure to the world of credit unions came when he was a CA student with Alexander Sloan, where he worked on a credit union audit and also helped to set up a union. He was interested but, as he explains: “None of the existing credit unions were really big enough to employ a CA.”

In 1996, however, Scotwest was looking for an accountant-manager. He joined and as the union grew, the job grew with it. He became chief executive in 2005.

Although credit unions have advantages for members with a range of incomes – for example, life assurance comes as part of the package – helping those on low incomes and the socially excluded remains a key objective.

Ashley says: “One of the projects we’re involved with is helping people who have no savings at all to save money. We are working with a number of housing associations, and they have the facilities to enable people to save a few pounds a week, via the housing association, when they pay their rent.”

The collapse of Christmas hamper business Farepak in 2006 showed how many people were using such companies as, effectively, a savings vehicle to cover the costs of the festive season. Unfortunately for Farepak’s customers, there was very little in the way of regulation or protection for those who saved in this way, in contrast to a credit union.

Ashley says: “We had a lot of accounts opened after Farepak.”

Scotwest also appeals to those who want a current account but who do not want to be overdrawn. Its debit card has been designed to check the money in the account ahead of authorising the transaction, so it is hard to become overdrawn inadvertently.

As a member of ICAS, Ashley feels it is right to put something back, and for a number of years he has been involved in the Institute’s education system, first as an exam marker and more recently helping to set the questions for the Test of Professional Skills examinations and providing feedback for students.

Ashley says: “Being involved with the Institute has broadened my horizons. Talking with and working with other CAs gets you out of a world which can be insular.”

But it’s not all numbers. Outside of work, and his wife and young family, Ashley has long been interested in music. He has written two musicals and is musical director of the Orpheus Club, a Glasgow amateur company dedicated to musical theatre.

Ashley says: “We did Showboat with an all-black cast, which was quite an achievement in Glasgow.”

“We were also the only amateur group to do Evita and we even managed to get Madonna’s costume jewellery from the movie! We also had the Evita dress as worn by Marti Webb.

“We had musicians who played for the Scottish Opera playing in the pit, and I was conducting them. I felt as if I had died and gone to heaven!”

Not surprisingly, knowing Ashley was a CA, the Orpheus Club was initially keen to use his professional skills, but he prefers to keep his musical and work roles separate.

As he puts it: “They were looking for a treasurer, but I said no, I’m in this because I’m interested in music!”


WHAT IS A CREDIT UNIION

The World Council of Credit Unions defines a credit union as “a not-for-profit co-operative institution”. While the legal format of credit unions varies between jurisdictions, the basic concept is the same. Credit unions are there to help their members save and borrow, and any surplus is reinvested to members’ benefit. In that sense they are “for profit”, but profits are exclusively for members. Their customers and owners are the same people.

In the UK, credit unions are regulated by the Financial Services Authority. Together, co-operatives, credit unions and other mutual societies represent a membership of more than 30m, with assets in excess of £400 billion.

Credit unions are less widespread here than in some other countries, such as Ireland or North America. ScotWest, founded in 1991, is one of the largest.

The collapse of the unprotected Christmas savings club Farepak in 2006 highlighted the comparative advantages of credit unions (which, in contrast, are regulated and protected) as savings vehicles for those on low incomes. Growing the sector could reduce the influence of loan sharks in poorer communities.

In July, the Government published proposals to reform the legislation on co-operatives, including credit unions. Suggestions include:

  • The need to show a “common bond” between members (such as residence in a particular area, or a common workplace or occupation) would be replaced with a “field of membership” specified for each union, stating the maximum membership. A million would be the upper limit unless exceptional circumstances apply.
  • Bodies corporate, unincorporated associations and partnerships would be allowed to join credit unions.
  • Credit unions would be allowed to offer interest on deposits (currently, they can only pay dividends).

The Government believes the changes would make the co-operative sector more efficient, attract more savers and make it easier for credit unions to merge

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