Two changes affecting adult member accounts

Feb 13, 2021

Over the past 11 months, Covid-19 has placed an unprecedented strain on UK households, community groups and businesses – and credit unions are no exception.

LCCU’s board and management have taken a number of steps during the pandemic to support members, including the offer of a reduced rate of interest on loans and loan repayment deferrals.

We are also investing in our telephone support and online service to respond to the increase in demand for these services.

As the first lockdown was announced in March 2020 we met the additional cost of facilitating home working for most employees. To protect the credit union, management have utilised the government’s furlough scheme and reduced staff headcount. Several members of senior management also took a voluntary pay cut in 2020. 

Financial impact of Covid-19 on the credit union

In the last year we have seen a decline in the number of loan approvals and an increase in loan repayment defaults amid the pandemic. The credit union’s loan interest income has also dropped as members have taken up the offer of repayment deferrals. As a result of these and other factors, revenue has fallen below that projected in our financial plan. 

Whilst revenue has been adversely affected by the Covid-19 pandemic, membership savings have increased significantly. Some households are spending less during lockdown and so are able to save more. We encourage members to save regularly but very high deposits create a challenge for us because we are required to hold additional reserves against them.

Now, as part of measures to ensure regulatory compliance, we are required to increase the amount of capital we hold in reserve. To help achieve this, we are introducing two changes which affect adult members.

A one-off membership levy of £10.

This levy will be charged on 12 April 2021 on all active adult members with a SaverPlus balance of £100 or greater as of 31 March 2021.

We recognise the levy is far from ideal and we are mindful of the impact any such charge can have on our most financially vulnerable members. We reiterate that this is a one-off charge and members with saving below £100 will be excluded.

A temporary £30k cap on member saving deposits.

The temporary cap on savings deposits will apply from 15 March 2021.

This cap will bring LCCU into line with many other credit unions. Its impact will be monitored and the decision reviewed in a year’s time. 

Members who hold deposits above £30,000 will be contacted individually and provided with one month’s notice of the introduction of the cap. 

Although more than 99 per cent of members will be unaffected by this change, we understand that some will hold large deposits out of a desire to support the credit union’s work in the alleviation of poverty.

A better way to support our work is to open one of our debit card current accounts and, when considering a loan, to take one from us.


Alongside our other plans to boost income and control costs, we are confident these changes will deliver a strong and sustainable credit union.

After celebrating our 20th anniversary last year, we look forward to your continued support and another 20 years of improving financial resilience and supporting the alleviation of poverty in east London.