Lambeth-based financial groups collaborate to battle 'dinosaur banks'

23 Mar 2012 News

New legislation which allows credit unions to welcome organisational members as well as individuals has paved the way for a collaboration between the London Mutual Credit Union and the Brixton Pound, in a bid to encourage citizens in Lambeth to keep their money local.

New legislation which allows credit unions to welcome organisational members as well as individuals has paved the way for a collaboration between the London Mutual Credit Union and the Brixton Pound, in a bid to encourage citizens in Lambeth to keep their money local.

Following the passing of a legislative reform order aimed at encouraging the use of local credit unions - non-profit co-operative financial institutions - the Brixton Pound is transferring its stirling reserves of around £30,000 away from HSBC and into an LMCU account.

The Brixton Pound is a community interest company printing its own money for use in the local area, with 200 Brixton businesses currently accepting the paper notes and B£65,000 in circulation. It is the UK's first local currency in an urban area, and the fourth town to have its own currency, after the Totnes Pound in Devon, Lewes Pound in Sussex and Stroud Pound in Gloucestershire. 

Last May the Commission on Big Society said that organisations with a social purpose are “constrained by the shape of financial services in the UK”, and that banks should be the "engine for social change". 

Simon Woolf, Brixton Pound managing director, said: "By moving our money in this way, anyone spending Brixton pounds knows they are not just supporting their favourite local businesses but also people on low incomes in their neighbourhood who benefit from the credit union's ethical loans. It's a win-win for everyone."

The move comes during 'Move your money month', a campaign to encourage citizens to move their deposits and savings away from the big five high street banks and into more 'ethical' financial providers. Brixton Pound founder and senior researcher at the New Economics Foundation Josh Ryan-Collins added:

"It has been well over three years now since the financial crisis and people still don't see any meaningful reforms to our dinosaur banks. But here in Brixton we're ensuring our money goes not into damaging financial speculation and banker's bonuses but to those parts of our economy that need it most: small businesses that create jobs and low-income residents facing increased hardships with government cuts."

The Legislative Reform Order changing credit union legislation came into force on 8 January allowing credit unions to extend their membership to organisations as well as individual members under the 'common bonds' rule. This rule requires members within a credit union to have 'common bonds' such as living or working in a particular area, being employed by a particular employer or following a particular occupation, for example. 

The first £80,000 of any deposit with a credit union is guaranteed by the government.

Brixton Pounds are available at a rate of 1:1 and residents adopting the Brixton Pound's 'Pay by text' service, which currently has 60 businesses signed up to accept payment this way, receive a bonus 10 per cent on every pound invested, so for every B£10 topped up, the resident will receive B£11 for spending.