The Credit Union was originally established for a London-based local authority staff in 1982, by a small group of volunteers. It was formed to address the economic hardship among low paid manual workers and the local Caribbean community. Like other British credit unions at the time, it was a small savings and loans co-operative which offered its members a limited range of financial products and services. Despite being the first credit union in the UK to operate a payroll deduction scheme, Southwark Council Employees Credit Union only recruited between 200 and 300 members from a workforce of over 12,000 in the first nine years of its existence. From 1991 onwards, Southwark Council Employees Credit Union implemented a range of reforms, including the introduction of improved IT systems and staff development. In 1997, it opened membership to employees of King's College Hospital, under the name Southwark and Kings Employees Credit Union and, in 1999, as Southwark Credit Union, to anyone living or working in the borough. Southwark Credit Union was among the first British credit unions to adopt the PEARLS financial monitoring system, which increased financial discipline, maximised savings and which lead to the introduction of risk based lending. As part of a drive to develop products and services to meet people's needs, in 2006, the credit union was the first in the UK to offer current accounts, alongside benefit direct accounts, flexible savings accounts, instant and accessible loans. In 2006, Southwark Credit Union became the first credit union to deliver Financial Inclusion Growth Fund loans through a contract with the Department for Work and Pensions.
Mergers
Throughout its early years, the credit union absorbed a number of smaller credit unions in Southwark. The first of these, in 1997, was Camberwell Health Authority Credit Union, followed, in 2001, by the Camberwell Credit Union. In 2010, members of Lambeth Savings and Credit Union voted to transfer engagements to Southwark Credit Union, which adopted the present name, extending its common bond to take in the London Borough of Lambeth. In 2012, LMCU absorbed the Pimlico Credit Union, enlarging its south London base to the City of Westminster. Most recently, in 2013, it absorbed Camden Plus Credit Union, expanding its area of operation to include London Borough of Camden
Products
In 2012, London Mutual Credit Union became the first British credit union to offer payday loans. The initial 12 months trial for short-term payday loans was completed in 2013. The scheme was funded by the Friends Provident Foundation and the Barclays Community Finance Fund, with project support from the Financial Inclusion Centre. The pilot payday loan received 6,087 applications for an average loan of £238. In the 12-month pilot, 2,923 short-term loans with a value of £687,757 were provided to 1,219 different borrowers. Under the scheme, borrowers could take out a payday loan or spread out repayment over a longer period. 29% of applicants repaid their loan in one month, while 59% of applicants opted to repay their loan over three months. However, in a survey, 66% of applicants said their main reason for taking out a loan with London Mutual was the low cost of borrowing compared to other payday lenders. Only 10% said that the option to repay over a longer period of time was their main reason for choosing the credit union. According to LMCU, the payday loan pilot saved 1,219 borrowers collectively saved £145,000, or £119 each, compared to borrowing from a high-cost payday lender. The credit union developed its payday and short-term loan products in response to increased use of payday lenders in the London boroughs it serves. Following the completion of the pilot London Mutual Credit Union made its payday loan facility available to anyone living or working in the London boroughs of Southwark, Lambeth, City of Westminster and Camden. A CUOK payday loan allows credit union members to borrow between £100 and £1,000 over three months, with APR starting at 26.8% and no late payment fees. Like high-cost payday lenders the credit union allows borrowers to take out a CUOK payday loan online.
