Managing Declines Fairly: How Do Credit Unions Support Declined Loan Applicants Today?


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This is the first output from an exciting programme of research that aims to evaluate how credit unions can manage loan declines most positively. In this report, James Fell, who many credit unionists will know from Quo Money, presents the results of a survey of 64 credit unions about their current experience of declines management. The paper reveals how credit unions try to support members and the constraints they find themselves working under in this area. We are grateful to Sacha Romanovitch OBE, CEO at Fair4All Finance.


Credit unions are different from banks in the way they seek to find a solution to their members’ borrowing needs, not simply accepting the first automated decision. Inevitably however, some members are declined for a loan. And this is a significant number of members: over a third of credit unions in our survey are declining over a quarter of their members’ applications: this year as the economic environment remains fragile, we could see that situation worsen. We know that decline is a point of vulnerability, when there is a risk that members cannot meet their need or turn to high cost or informal credit alternatives with detrimental outcomes. More positively, they could be supported to become accepted borrowers from the credit union, that is a great benefit to the individuals concerned as well as the commercial strength of the credit unions.

This research now moves on to look at member and non-member experience and expectations in relation to being declined, with a survey to be conducted by Ipsos MORI and our research partners at Coventry University. We will then move on to collate examples of best practice from financial services around the world, and finally test out ‘what works’ with credit unions themselves in order to produce a best practice guide.