Friday, April 6, 2018
I am just nearing completion of a kitchen renovation; for those of you who that have ever renovated a piece of your home, you can relate to the fun of living through a construction zone. Surprisingly, the construction was actually the least stressful part, mainly due to a patient and understanding contractor. The main issues I ran into was with suppliers who failed to address a simple fundamental business concept: SERVICE! My new Samsung dishwasher came complete with a faulty part that caused it to leak and (thankfully) display an error code. Calls to the warranty department were met with roadblocks after roadblocks, with staff not really caring about relationship building or developing loyalty, instead following a scripted process that made little sense. A simple repair of a $50 retail part after three weeks turned into a moving truck taking away my new dishwasher--apparently, that was cheaper than having someone come and repair the unit! As I still await my refund, I can’t help but think the process does not have the best interests of the customer in mind. I don’t have a dishwasher or the money I paid for it a full month after I purchased the unit.
I am simply one of millions of customers that purchase Samsung products and I guess my business is not important. After all, the company’s main focus is on driving profit and meeting share price expectations for its shareholders who are not necessarily their customers. They must produce quality products otherwise sales would suffer, but why neglect the service? Sales and service should compliment one another, adding customer value. The problem lies with ownership! I have little influence over Samsung polices, procedures, products, services, or staffing. I am a consumer so I simply consume the goods produced by the company if I like them, and that is where it ends.
The Credit Union model is fundamentally different, a fact which most members are likely not even aware of. To use the services of a credit union you must first become an owner. You purchase your shares which then provides you with access to all the products and services the credit union offers. The shares you pay makes you an invested owner with also means that you have input on how your credit union is run and ways in which it may be improved. Most members simply want to avail of the products and services--and there is nothing wrong with that--but it is always nice to know that, as an owner, your opinion is valued and taken seriously. I know I wish my concern on my dishwasher could have been heard or taking seriously but that was not the case.
The vision statement of LECU was changed to focus on assisting members reach their financial goals with their best interests in mind. The focus is on people, not profit, and initiatives, such as low fees, more services, and a strong focus on advice, are put in place to support this vision.
In the most recent member survey, members indicated that 97.2% were satisfied with their relationship with LECU. In the word cloud that was captured when members were asked why they feel this way, the word service was prominent in member responses. Members are the owners; the purpose of the staff is to serve the owners daily and ensure they assist them in meeting their financial goals. It is vital that we continue to have the necessary policies, procedures, and standards in place to continue to provide superior service.
Tuesday, June 27, 2017
I am fairly confident in saying that most members dealing with our credit union seek us out for financial products and services. They hear about the great service and are most likely seeking an alternative financial service provider. They become members of a credit union with little understanding of the membership features and benefits. So, does the co-operative difference really matter? In order to understand this question, members need to understand how a credit union is different.
First, as a member-owner of the credit union, it’s all about you! The credit union was originally formed by members to serve their own needs and best interests; that concept still holds true today. We, as a staff team, work to service you. You are the fundamental reason why we exist so every decision we make is to satisfy our vision to assist all our members to meet their financial goals by providing advice and services with a focus on our members’ best interests. This is our guiding strategic direction; we must work hard to build trust so that you know we are working to assist you in meeting your financial goals. How is this different? Members are owners and not customers. Yes, every business wants to treat its customers well and build loyalty, but sometimes business make decisions not in the best interest of its customers but in the best interest of the business. At your credit union this is not the case. For example, we forfeit about $178,000 in service fee revenue annually by offering seniors and non-profit account holders access to free banking. That revenue could certainly assist our bottom line but how much is too much? Our competition continues to make record profits for the benefits of its investors, not necessarily its customers.
Second, the credit union, as a co-operative, has a fundamental responsibility to make its community a better place. This responsibility makes up of one of seven guiding principles that make the co-op model unique. The participation of your credit union in community events should not be confused with methods to try and get more business. The purpose of these actions is to truly improve the community and fill potential social gaps. Cleaning a beach makes the community better by giving it a safe and environmentally acceptable place for families to enjoy the outdoors. We recently purchased huge barbecues to assist non-profit groups to fundraise in their community so they could also do good work. Another major project we undertook was the establishment of a co-operative daycare to fulfill a childcare gap in our community. These activities could not take place without the support of our members. A member choosing to do business with their credit union is a social change agent in their community.
There are many more differences but these are just a few for today. The question that I have is this: are you willing to become a social change agent in your community? Knowing that you have to avail of banking services either way, would these two fundamental differences sway your opinion when choosing a financial institution? Stay tuned for more on the credit union difference.
Monday, July 25, 2016
Over the last number of years I noticed a growing trend in the financial sector surrounding the view on bankruptcy. I have witnessed a softening approach to the consideration of applying for bankruptcy. There was a time when individuals filed for bankruptcy as the last resort, today however applications for bankruptcy show clear signs of the lack of advice that people are receiving. There are particular cases where bankruptcy is warranted however there are so many alternatives that should be pursued first. The purpose of this blog is to inform readers to really think hard before declaring bankruptcy and scaring their credit score for 7 years. Seven years is a long time to interrupt credit access especially with a family where the potential need for credit is increased. It is not easy to see uninformed members of our credit union immediately regret the bankruptcy decision because they were not provided the facts and the alternatives.
The Office of the Superintendent of Bankruptcy Canada which regulates bankruptcy legislation even highlights that bankruptcy should be the last resort. They recommend several options prior to considering filing for bankruptcy.
1. Contact your creditors. Creditors will want to work with you on trying to restructure your credit to make it more affordable. If you are honest, explain your current situation and show the correct intentions then this will increase your chances of a creditor working with you. Your credit union is here for you, so it is very important that we work with you and assist during a rough patch. Far to often I see the situation where members are embarrassed by their financial situation and as a result by-pass talking to their credit union contact. It is during these rough patches that you need the professional advice of a credit union advisor.
2. Credit Counselling. If you are uncomfortable to speaking to many creditors and you want the process to be easier, then this free Government supported service is available. These individuals are professionally trained and are there for your benefit. The service is completely free, and they work on your behalf to talk to creditors to arrange rate reductions, term extensions, lower payments or settle on a balance for your account. This is an excellent service and they work to protect your credit and keep a relationship with your creditors which you will value in the future.
3. Debt Consolidation. Many credit extension problems commence with credit spread across many products. The more credit options that a person has the more difficult it is to manage a credit reduction strategy. A rule of thumb I often advise members I speak to is the rule of one. One source of revolving credit (credit card or line of credit), one loan, one mortgage. Consolidate your outstanding credit in one of those products and remain committed to managing your outstanding credit. I am witnessing bankruptcy files with as high as 6 credit cards and multiple other credit product lines. The potential of missing a payment, not realizing the accumulated debt, or paying high rates become prominent with such a situation. Applying for a consolidation loan is a great way to commence a strategy to manage debt.
4. Consumer Proposals are very similar to credit counseling however the focus is on settling the debt for a lower amount. The outcome of this action could result in an individual’s credit score drastically reducing because essentially the debt was not paid in full. Traditionally this service comes with a cost and is provided by a bankruptcy agency.
Bankruptcy is of course the last resort where you assign all your assets acquired during your bankruptcy to the trustee representing the bankruptcy agency. These assets will be divided among your creditors and liquidated. In some cases the trustee will negotiate on your behalf with a secured creditor to allow you to keep a particular asset. For more information follow this link https://www.ic.gc.ca/eic/site/bsf-osb.nsf/vwapj/Dealing-with-Debt-EN-F01-2015-12-03.pdf/$file/Dealing-with-Debt-EN-F01-2015-12-03.pdf
People also need to understand that the filing of bankruptcy is a business. There are agencies that guide people through the process, provide advice, and collect handsomely for it. I am not indicating that all agencies are financially motivated however people need to understand that this service comes with a cost. This cost should be considered when balancing the current debt versus the payment for bankruptcy service. For example, if your bankruptcy application is going to cost an average of $300 a month for 21 months, a thought should be how this $300 can be used alternatively to bring down your debt. I have witnessed cases where people have declared bankruptcy with small debt loads. If they had sought credit counseling and used the funds they were paying for bankruptcy to reduce their debt, they could have protected their credit and paid of their credit obligations.
The bottom line is there are legitimate reasons where bankruptcy is the only real solution. The sad reality is that people are getting the wrong advice and bankruptcy is used as a first resort versus taking other necessary steps. In one case in which I recall, members went bankrupt and the assets that were seized by our credit union were sold for the near balance of the debt outstanding. If the members simply sold the assets themselves and worked with the credit union, the remaining balance could have been consolidated and bankruptcy avoided. Instead, they had to deal with a poor credit rating for seven years and experience their assets being displayed for sale in the public.