... about Grand Central Savings

Transcription

1 ... about Grand Central Savings 1. The History 2. The Need 3. The Organisation 4. The Services 5. Grand Central Savings & Universal Credit 6. Grand Central Savings & Credit Unions If I didn t have a Grand Central Savings account, I d be in dire straits. The account is a godsend. Without it, I d really struggle, because I use it to run my house, pay my gas, and take care of my family. Glasgow branch customer

2 The History Grand Central Savings (GCS) was launched in 2001 as a project of the Big Issue in Scotland group of companies, becoming part of its charity arm, The Big Issue Foundation Scotland. While the Big Issue had succeeded in attaining its primary goal of providing homeless people with the opportunity to earn an income, it had soon became apparent that without access to some form of banking facility, and the opportunity to save and plan, there was little hope of the average homeless person being able to move themselves out of their predicament. The GCS initiative followed negotiations with the Bank of Scotland (BoS) whereby a unique agreement was reached; allowing the Big Issue in Scotland to operate its own savings facility for socially and financially disadvantaged individuals. Under the arrangement (utilising the bank s Client Banking i SITE Cash Management System), GCS was permitted to open and administer accounts, offering a basic cash-in/cash-out service to their customers. After a successful pilot period, GCS further developed with financial support from the Scottish Executive s Rough Sleeping Initiative. A significant milestone in the project s development was reached in March 2008, with GCS being floated off from the Big Issue group as an independent charity. This move followed the recognition that such a facility could benefit a far larger section of the community than just those who were homeless. The customer base rapidly expanded to include: Ex-offenders (including prisoners moving back into the community). Benefit claimants in general (including those on disability). People with mental health and addiction problems. Refugees and asylum-seekers. Immigrant workers. Pensioners. Students. Currently, GCS operates branches in Glasgow and Inverclyde, the latter being opened in April Together, the branches serve around 3,000 regular customers, and in the financial year 2011/12 processed almost 35,500 transactions. Since its launch, GCS has distributed around 30 million to its customers, with a large proportion of that sum being in the last five years alone, testimony to the rapid acceleration in growth that followed the launch of the independent charity. A wide range of organisations in the statutory and voluntary sectors refer clients to GCS, valuing the element of financial security and planning the service provides. Often, the clients links to GCS are incorporated as an integral part of their personal development plans. GCS has also developed strong links with carers, thus enabling services to be offered through them to individuals whose condition prevents them attending the bank branch in person. 1

3 The Need To most people, it would be hard to imagine functioning in modern society without access to even the most basic of financial services. Yet hundreds of thousands of Scots are in exactly that position, the majority of them belonging to the poorest section of our society. A recent report by Citizens Advice Scotland (Banking on the Basics: 2010) indicated that one in ten Scots is unbanked, with, significantly, that figure dropping to as low as one in five households in the areas of greatest deprivation. For the individuals concerned, this can mean: The lack of any safe place to keep their money, thus rendering them vulnerable to theft or even accidental loss. Difficulty in maintaining a tenancy, lack of access to standing order facilities making it all too easy to spend the rent money on what are seen as other essentials. Difficulty in obtaining employment, many employers insisting that wages can only be paid direct into a bank account. Major (if not insurmountable) difficulties in attempting to save or budget effectively. Loss of part of an already meagre income through having on occasion to resort to expensive cheque-cashing facilities. Losing out on money-saving deals offered by utility suppliers and others to those who pay by standing order or direct debit. An inability to obtain even a modest level of credit. In such ways, a large section of Scottish society finds itself trapped in a life of misery and deprivation, with little or no prospect of escape. Regrettably, mainstream banking provision has failed to offer a satisfactory solution to the problem. The level of ID required by the High Street banks (e.g. passport, birth certificate, driving licence) can in itself be an insurmountable barrier to those with little or no disposable income, the potential 140 cost of such documentation being far beyond their means. Many simply find banks to be places that are either intimidating or unwelcoming, and not for the likes of them. The Post Office does offer a card account into which benefit payments can be made. However, this account suffers a major disadvantage in that the card-holder can only withdraw money, and cannot pay money in. It is basically just a refinement on the old across the counter giro payment. Hardly a vehicle for saving or financial planning 2

4 The Organisation Grand Central Savings (GCS) is an independent Scottish charity (SCO39225) offering financial services to people who are socially and financially excluded. It delivers its services through a network of remote terminal units located in the premises of local partner organisations. Its activities are overseen by a board of directors ( trustees ), of which the Managing Director is the sole executive member. The composition of the board reflects a wide range of expertise, its members being drawn from the financial and business communities, as well as the public and voluntary sectors. The Managing Director, Jackie Cropper, has more than 25 years experience working in deprived communities and with people suffering disadvantage. Before taking up her present post, she was employed by the Big Issue in Scotland group of companies, where she held positions at chief executive and director level. During this period, she also served as managing director Work Scotland, an associated company specialising in job recruitment and progress-to-work initiatives. Prior to this, she was involved in community work in a large Edinburgh housing scheme. Basically, the core organisation comprises: Managing Director s Office - responsible for the overall leadership, direction and development of the organisation, and for the provision of services such as marketing and communication, financial control and risk management. Support Services Department responsible for the provision and maintenance of the banking infrastructure, including account-handling and the processing of all transactions. It also provides IT and admin. support to all sections of the organisation, and has responsibility for the establishment and implementation of the remote teller units. Field Operations Department responsible for the on-the-ground oversight and supervision of the remote terminal units, and for liaison with the local communities, including the facilitation and servicing of local Steering Groups. Remote Terminal Units are linked directly to the GCS central hub in Glasgow, which has responsibility for processing all transactions, including the opening and closing of accounts, the setting-up of standing orders, etc. While based in partner organisations premises, the counter staff are employed, trained and managed by GCS, as this is a requirement of banking regulations. These local staff members are supervised and supported by a team of GCS fieldworkers. GCS s services are offered to local communities on a contract basis, whereby GCS undertakes to provide and operate a package customised to meet specific local needs. In return, local partner organisations are required to provide, or undertake to fundraise, the necessary set-up and operating costs for their local remote terminal unit. Ongoing local input into the activities of each service is ensured through a system of Steering Groups, as well as customer forums and focus groups. Comprised of representatives of the local partner organisations, the Steering Groups meet on a quarterly basis to receive an update on activities, and to provide feedback and suggestions for change or improvement. 3

5 The Services Basic Savings Account GCS s core product. It offers a no-nonsense, cash-in/cash-out savings facility, free of any fees or charges, and truly accessible to all. Opening an account takes on average only about five minutes, and not even an address is needed. All that is required is the production of one form of ID (anything from a DWP letter to prison release papers) and the provision of a NI number or a Home Office Registration Card. Two sample signatures and a passport-style photograph are taken for identification purposes. HomeGuard Account an answer to Universal Credit The HomeGuard Account is a product specifically aimed at helping customers cope with the problems they may encounter following the introduction of Universal Credit and other aspects of welfare reform. The service guarantees payment of the customer s rent, council tax and (where appropriate) home insurance the instant their benefit is received into their GCS account. Negotiations are currently underway with a view to adding a facility for the payment of television licence and utility bill instalments. It offers an ideal way to avoid the potential pitfalls of Universal Credit. SuperSaver Account - a kickstart introduction to regular saving Aimed at encouraging (and highlighting the benefits of) regular, structured saving, the SuperSaver Account offers an enhanced reward to those committing to save on a regular basis over a stipulated period of time. These incentivised accounts offer a bumper bonus of 50p for every pound saved under the scheme. The maximum qualifying amount of savings is 120, attracting a bonus of 60. Account holders commit to saving up to 10 per month over a 12-month period, and to make no withdrawals from the account during that time. A minimum of 1 must be paid into the account each month for the bonus to apply. To be eligible for a SuperSaver account, customers must already hold (and continue to operate) a basic savings account, and either be on benefits or earning no more than the minimum wage. Customer Helpline A telephone helpline providing customers with advice on, and assistance with, the operation and management of their accounts. In-branch Advice Sessions It is GCS policy, wherever possible, to make facilities available on its premises to external advice services which can be of benefit to its customers. Subjects covered include money advice and combating fuel poverty. The potential for providing in-house legal advice through the services of local Law Centres is being examined. 4

6 Grand Central Savings & Universal Credit BRIEFING PAPER The Government plans to redesign entirely the systems of means-tested benefits and tax credits for working-age adults by replacing them all with a single benefit, known as Universal Credit, to be administered by the Department of Work and Pensions. Current benefit payments such as Income Support, income-related Jobseeker s Allowance and Employment and Support Allowance, Working Tax Credit, Child Tax Credit and Housing Benefit will all be absorbed into the new Universal Credit. New claimants will start to receive Universal Credit from October 2013, with all existing recipients moved across over the subsequent four years. How GCS s customers will be affected? One major characteristic of Universal Credit is the move to monthly payments. Currently, the majority of GCS s customers receive multiple benefits at different times throughout the month, making it easier for them to budget. Also, some benefits are paid directly to service providers, e.g. Housing Benefit paid directly to social and private landlords. Such direct payments enable customers to budget more effectively and also take away the onus on the individual to remember to pay rent, etc. The introduction of Universal Credit will put the onus back on the individual to pay for rent, council tax, etc. Given the nature of our customer base, it is likely that such changes will result in a dramatic increase in rent and council tax arrears, inevitably leading to many cases of eviction and homelessness, as people struggle to cope with the budgeting pressures that will come with a one-off monthly benefit payment. How GCS can help alleviate the pressures of Universal Credit? With Universal Credit due to take effect from October 2013, it is vital that actions are taken now to reach the most vulnerable and financially-excluded members of the public. With immediate effect, GCS is taking steps to ensure that it is equipped to deal with the demands that Universal Credit will bring, in the process ensuring that as many services as possible are available to our customers to help alleviate the pressures that will be placed upon them once the changes are implemented. Planned new services include the introduction of a HomeGuard account aimed at ensuring customers are able to safeguard their tenancies and avoid the risk of falling into arrears and/or eviction. The account will guarantee automatic payment by standing order of rent and council tax instalments immediately a customer s benefit is received into their Grand Central Savings account. There will also be a facility to pay for a television licence and house insurance by instalments, and it is hoped that, eventually, power bills can be added to the list. Discussions are currently taking place with local authorities and the DWP to ensure that GCS is seen as a large part of the solution to Universal Credit. 5

7 Grand Central Savings & Credit Unions BRIEFING PAPER Grand Central Savings relationship to credit unions is complementary, rather than competitive, in nature. Grand Central Savings was established specifically to serve the most disadvantaged sections of the community those unable or unwilling to access mainstream banking and financial services provision, often having mental health and addiction issues and/or other problems associated with, or stemming from, poverty. Many lead a chaotic lifestyle. GCS provides such people with a basic cash-in/cash-out transactional banking service. It does not make loans and does not intend to do so in the future. The service (including cheque deposits) is totally free to the customer, essentially operating on a subsidy basis. Access to GCS services is open to anyone who has a National Insurance number or Home Office registration card and can produce one other form of ID (anything from a prison discharge letter to an eviction notice or court order). The overwhelming number of individuals for whom a GCS account is opened have no recent history of saving, and many have a poor or non-existent credit record. Most new customers use GCS as a way of managing their money on a day-to-day basis, making frequent sometimes daily withdrawals. This form of account operation could prove burdensome and costly to a credit union. All the above, taken together, makes it unlikely that the average individual who seeks to open a GCS account would prove an attractive proposition to a credit union. That said, however, GCS does offer an ideal stepping-stone, enabling individuals, over the longer term, to move on to more sophisticated forms of financial service, such as credit unions and High Street banking. To assist customers to progress to a point where such a move is possible, GCS offers them the opportunity to stabilise their financial situation by setting-up the likes of special rent account and rent repayment plans, and also offering a special incentivised savings scheme aimed at encouraging and fostering regular, planned saving. Have thus achieved a degree of financial stability and acquired basic money management skills, a customer could be well placed to benefit from the services of a credit union. Thus, Grand Central Savings operations are entirely compatible with, and complementary to, those of the credit unions, offering, as it were, what amounts to a pre-credit union facility. 6