The Credit Union is Back
Friendly Societies were very popular in England between the 16th and 20th centuries. How is it that we seem to have come full circle?
Friendly Societies are set up to allow people to save for a rainy day or access cheap credit when times are hard. They were supremely local - local people who knew each other, and felt a common obligation, and so felt that they could trust each other.
In the second half of the 20th century, and now the beginning of the 21st, Friendly Societies have morphed into banks, growing ever larger and less local. They perform due diligence, lend at commercial rates, and faceless managers don't let anonymous people borrow if they have a poor credit rating. These Societies trade to make big profits. They aren't "friendly" any more.
This means that people who fall on hard times can't get access to low-cost credit, to tide them over. The loan sharks – people who are willing to take on high-risk borrowers, and charge high interest to cover their risk - are out in force, knocking on doors, even!
Our church, along with many of the other churches in the area, have restarted the idea of the local friendly society. Those who can afford to save a little each week, knowing that are building up a savings pot for a big event such as Christmas. We offer to lend to people we know we can trust, but who have fallen on hard times. A person's past trustworthiness becomes their biggest asset. Sure, a great many of those people who have always had poor credit ratings will still not be eligible to borrow from the communal pot. But the pillars of society who have fallen on hard times temporarily, who would be refused by the bank because they no longer have a job, are the people who will benefit.
When the chips are down, people revert to type – people go back to doing what they understand and what they're good at.