Credit Unions spending too much on ancillary services

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NoRegretsCoyote

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Or credit unions could try looking at big overheads like prize draws and sponsorships.

It's worth looking at the annual report of a large credit union to see how much they essentially spend on marketing.
 
NoRegretsCoyote said:
prize draws
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Prize draws are self funded.

The Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 lists ‘Regular draws’ as item 13 of Schedule 2, stating that:
(a) the credit union may carry out regular draws for which members are eligible to enter on payment of a regular subscription,
(b) condition to be fulfilled— such draws must be conducted on a break-even basis.
 
RedOnion said:
Prize draws are self funded.

The Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 lists ‘Regular draws’ as item 13 of Schedule 2, stating that:
(a) the credit union may carry out regular draws for which members are eligible to enter on payment of a regular subscription,
(b) condition to be fulfilled— such draws must be conducted on a break-even basis.
Click to expand...

The draws themselves are on a break-even basis but the marketing has a cost.

Navan Credit Union (for example) spent €210k last year on promotions, advertising, donations and sponsorship.

Presumably some of their staff costs of €2.5m are related to administration of promotions too.



I'm not a CU member so I don't really care. It just seems odd to be capping deposits when spending so much on ancillary stuff.
 
NoRegretsCoyote said:
The draws themselves are on a break-even basis but the marketing has a cost.

Navan Credit Union (for example) spent €210k last year on promotions, advertising, donations and sponsorship.

Presumably some of their staff costs of €2.5m are related to administration of promotions too.



I'm not a CU member so I don't really care. It just seems odd to be capping deposits when spending so much on ancillary stuff.
Click to expand...

You do realise they have to advertise their products and services? I wouldn’t necessarily call marketing ‘ancillary’.
 
24601 said:
Ah yea, I suppose they have no competition from the banks or moneylenders.
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That's why I specifically said "credit union services".

I'm not a CU member, but if I was I'd prefer no cap on deposits than the chance to win a new car or whatever.
 
NoRegretsCoyote said:
That's why I specifically said "credit union services".

I'm not a CU member, but if I was I'd prefer no cap on deposits than the chance to win a new car or whatever.
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What are “credit union services”? Your point is clearly wrong since all the services they provide have plenty non-CU alternatives so they have a monopoly on nothing.

In terms of the car draws, the costs associated with them dwarf in comparison to the cost of maintaining their reserves at a time of huge asset growth driven by the increase in deposits. If they can’t lend the money they have no business taking in large deposits.
 
@24601
I can't believe people are focusing on car draws and advertising, when the cost is easily offset by the free labour...... ;)

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Credit Union's are restricted under law to charging a maximum of 12% per annum (1% per month). This effectively renders most small lending to those at risk of financial exclusion as loss-making - despite this credit unions are still, by and large, offering these loans to members. Provident, to...
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24601 said:
What are “credit union services”? Your point is clearly wrong
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Well in that case I concede.

Actually no. Credit unions provide services a bit different from banks. Obviously there is overlap, but if credit unions didn't provide something different they wouldn't exist.

Anyway, banks can compete with each other geographically but credit unions can't.

In my home town there is one credit union. I've known what it does since I've been about ten. It's still in the same place and provides the same services as always. I'm not a member, but if I was I would query the spend on advertising.

@RedOnion

I was under the impression that the free labour is dying out especially in bigger CUs, but feel free to correct me.
 
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