In the wake of a recent Citizens Advice study* which revealed that that nine out of ten benefit recipients believe they will be unable to cope when Universal Credit is introduced, there is now an urgent need for both the Department of Work and Pensions and
Credit Unions across the UK to consult with the e-money industry in order to gain a better understanding of what online budgeting account facilities are available to unbanked benefits recipients. The switchover will inevitably place huge pressure on the often
thinly resourced member support functions in Credit Unions nationwide, many of which are simply unlikely to cope.
The great frustration is that the e-money industry can and is offering facilities to this sector that beat the services of major banks hands down. Sadly, either the government is unaware of these facilities, or it is simply uninterested in promoting their
use. Either way, it needs to wake up to the impending Universal Credit crisis and act now to address these issues before it is too late.
On the other side of the coin, Credit Unions across the UK need to modernise their member support facilities through partnerships with prepaid e-money solutions providers, in order to meet the needs of their unbanked members.
With an anticipated eight million Universal Credit payments expected over the first four years aloneƗ, the uptake of financial solutions designed for low income individuals and those with developing financial skills is set grow dramatically in 2013/14. By
adopting prepaid solutions, Credit Unions are able to provide many of the traditional money management facilities that banks are refusing to offer. For example, an e-account, together with an account number and sort code is capable of supporting standing orders,
money transfers and benefit payments.
By taking this route, members can also benefit from ATM access and worldwide payment acceptance via Credit Union-issued prepaid and debit cards powered by the major payment schemes. Many Credit Unions have already taken this step, but there are still hundreds
across the country that haven’t, which is cause for grave concern. Without access to a traditional bank account, where else are these people to go?
For both the government and Credit Unions across the UK, the time to act is now. Otherwise, it will again be this under supported sector of society which will be hit the hardest. The e-money industry is working hard to support the transition to Universal
Credit; the onus must now be on other supporting stakeholders to work with us to make the best of the situation.
* Details of the study available
Ɨ Department of Work and Pensions.