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Personal Micro Credit The “ It Makes Sense” Loan Presentation to Chapter 21 22 nd November 2017

This presentation introduces the Personal Micro Credit (PMC) program, which aims to address the challenge of vulnerable individuals in Ireland struggling to access small and affordable loans. The presentation covers the background of the PMC program, its objectives, pilot results, national rollout plans, barriers to success, and product features such as the Household Budget System (HB). The PMC program is seen as a low-risk way for credit unions to serve the community and provide an alternative to moneylenders.

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Personal Micro Credit The “ It Makes Sense” Loan Presentation to Chapter 21 22 nd November 2017

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  1. Personal Micro CreditThe “It Makes Sense” LoanPresentation to Chapter 2122nd November 2017

  2. Agenda Background The PMC Journey – Pilot to Rollout PMC – Key Statistics Product Features Household Budget System What Next Q&A 2

  3. Foundation’s Journey 2007 2012 Community & Voluntary Sector Microfinance for business 2015 2017+ Social Enterprise Sector Personal Microcredit 3

  4. Personal Micro Credit - Background How come the most vulnerable in Irish society are finding it difficult to obtain small affordable loans to meet genuine needs ? • Circa 280 CUs • Great reputation • Funds to lend • Interest Rates of 6% • 330,000 customers • Interest Rates of 190% • Convenience and speed 4

  5. Personal Micro Credit - Background Money lending organisations provide a convenient service and price is not an issue Central Bank Regulations are preventing Credit Unions from lending Small no. of credit unions have lost their raison d’etre – serving the community Perception that credit unions are not available to me 5

  6. “The Social Injustice” 2 x €500 loans in a year – difference in interest is €260 Equivalent CU loan repayable €520 6

  7. PMC Objectives • To offer an alternative to money lenders • To enable the credit union movement to support its ethos by serving all members of the community • To encourage education andmove individuals from financial exclusion to sound money management • To create a useable credit history for members to ultimately enable them to access other financial services and products • To create a path to “graduate” to becoming a mainstream credit union member 7

  8. Pilot – Nov 15 to May 16 • Pilot - 30 sites – 50 cases - word of mouth • “Cash” social welfare customers - repay via direct deduction • No membership/savings • Indebtedness or default did not disqualify • Ability to repay is essential • Customer satisfaction 97% - transformative • 1,200 loans - 4% default – 94% borrow again • Some issues – overall a success • Central Bank of Ireland • Departments - Finance/DSP • Credit union movement • An Post • Social Finance Foundation • CIB/MABS • NGOs - SVDeP 8

  9. National Rollout Program for Government 2016 • Need to get people to switch to CUs • Consider restricting interest rates in Ireland as is the case in 21 of 27 EU countries • Positioning of the CU movement being a credible alternative • Roll-out to the majority of CUs – 242 offices offer the product currently • Take time – agendas are full 9

  10. Importance of PMC • “I commend participating credit unions for their continued support…I would encourage any credit union which has not yet got involved to consider the benefits to their local communities” • An Taoiseach, Mr. Leo Varadkar, T.D. https://www.youtube.com/watch?v=frb-PyyDZrA 10

  11. Headlines

  12. PMC Live Locations 111 Credit Unions 242 Locations 12

  13. PMC Enhancements and WIP • Post pilot extension to all social welfare recipients (cash & EFT) • Semi automated processes introduced 05/16 • Savings dimension introduced 12/16 • Ability of borrower to retain HB repayment method for standard loans 12/16 • Enhanced training and support materials Q1/17 • Work underway • Progress IT automating An Post weekly files. This is being done at no cost. • Discussion underway with Wellington – awaiting response • Working with CUs where there are any issues 13

  14. Barriers to PMC Success • Can’t claim a national solution if the credit union movement as a whole are not bought in – common bond problematic • How do we align with CUs who state that they don’t need PMC as they already cater for this section of the community? • Need to automate further • Where a CU does not have a good experience with PMC we need to understand why and address the issues • Separate fact from fiction on PMC’s performance • PMC is a journey, great inroads made but not there yet 14

  15. Product Features

  16. Product Features

  17. Product Features

  18. Household Budget System (HB) • HB facilitates direct deduction from certain social welfare payment schemes • Operated by An Post on behalf of DSP • Only applies where SW payment is in CASH collected at PO – Full list of applicable S/W schemes available in Appendix 4 of PMC Loan Policy e.g. Job Seekers Benefit, One Parent Family • Deductions allowed at present • Local Authorities / Housing Bodies • Utility Suppliers • PMC Loans • Total deductions cannot exceed 25% of weekly social welfare payment - includes rent and utilities • Rent takes priority over any other deduction – both now and into the future

  19. What do PMC Credit Unions think? “Part of our social responsibility” “The PMC product works to grow our loan book in a low risk manner” “PMC is offering another repayment method, but one that enables us to lend to those that are financially vulnerable and excluded” “To keep people on social welfare away from moneylenders. In the hope of increasing our membership and attracting new customers” 19

  20. What next .. We encourage Credit unions to sign up to offer PMC loans Obtain Board approval of the dedicated PMC Loan policy Sign up with An Post to use the Household Budget system for repayments Contact the IT team in the League to get set up on the secure email The support team will assist with the on-boarding process, providing access to: Procedures and relevant documentation Training Marketing material Ongoing support Full repository of documents on creditunion.ie/itmakessense & CUDA Credit Union Support Platform Contact the support team on the dedicated PMC help line: 01 614 67 37 Email: Lisa.magee@afanite.com or Tracy.pelosi@afanite.com 20

  21. It’s actually a longjourney We need to get the vast majority of relevant credit unions signed up to offerPMC– by 2018 We also need to ensure live CUs are using it effectively We need a strategy to encouragepeople to switch from moneylenders to creditunions We need to get the CBI to consider the question of capping interest rates following the study Stakeholder management, project management and issue resolution 21

  22. Why am I here tonight ? Could we dare envisage an Ireland where licensedmoney lending charging usurious rates of interest has beeneliminated? • Would you like to be part • of that story? 22

  23. Q&A LIA Code = LIA-0-14320 IoB Code = 2017-2064 ILCU Code = 17147 23

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