As a co-operative business owned and controlled by our members, we are keen to make sure all members are well informed about our governance structure and the way we are organised.
HEYCU supports the ABCUL Code of Good Governance for Credit Unions, which is a benchmark for quality governance in our sector. The Code is frequently reviewed and improvements made.
We also took part in a Governance Project as part of the Credit Union Expansion Project, in order to work towards a world class governance model to support our continuing growth.
The current governance structure is founded on ultimate control by our members, but with a system of accountable committees, officers and staff to progress the work of the Credit Union.
Each member holds a £1 share which gives them both rights and responsibilities as set out in the Credit Union Rule Book. One of the rights is to attend and take part in the Annual General Meeting (AGM) which takes place each December. Members are invited to their AGM by letter or by email. Posters are also displayed in branches.
At the AGM members can vote to elect members of the Board of Directors, appoint the external auditor and make changes to the Rule Book (subject to approval by the Regulators).
The Board of Directors
The Credit Union has a Board of Directors comprising twelve members who are voted into office by members at the AGM. Each director serves for a three year term, and may then seek re-election for further terms.
The role of the Board is to lead and govern the Credit Union so that it achieves its objectives in serving the interests of the membership. The directors provide strategic oversight but do not manage the day to day operations of the Credit Union (that work is delegated to the Chief Executive and his team of staff).
However, the directors are accountable to the members for its effective governance. Their role therefore includes setting objectives and making plans and policies; reviewing risks; comparing performance against plans; evaluating the financial performance; constructively challenging and supporting management; and making sure the Credit Union upholds its values and social goals and operates within the law at all times.
At the first meeting after the AGM the directors elect the officers for the year, namely President, Vice President, Secretary, Treasurer and their representative on the Credit Committee. They also appoint the Personnel & Training Committee and Audit & Risk Committee, and nominate directors to oversee various policy areas such as:
In the interests of good governance, the President may not serve for more than four consecutive annual terms.
Credit Union directors do not receive pay for their work, they are volunteers. They all subscribe to the HEYCU Code of Conduct.
Directors also take part in training to fulfil their duties effectively. As well as induction training organised in-house, training is provided by the Association of British Credit Unions and its Academy.
The Board meets twelve times a year including holding a Strategic Planning Event when, in conjunction with the Chief Executive, they thoroughly review and update the 3-year Business Plan.
The President chairs meetings of the Board of Directors and the AGM and any special meetings of members. He/she aims to be a good ambassador for the Credit Union and to provide leadership, working closely with the Chief Executive and fellow directors.
The Secretary plays a key role in overseeing the governance and compliance work of the Credit Union, making sure records are kept of meetings and all statutory returns are submitted accurately and on time.
The Treasurer ensures the Board is well advised on financial matters and that the books of account and other financial records are maintained correctly.
The Credit Committee
This Committee comprises four members, three of whom are directly elected by the members at the AGM, while one is appointed by and from the Board of Directors. The directly elected members serve for a three year term and can then seek re-election. The Committee meets three or four times a year.
The role is to monitor the Credit Union’s loan business and loan assessments in accordance with the Loans Policy approved by the Board; oversee credit control processes in accordance with the Credit Control Policy; and review the loan portfolio with a view to making improvements (for example developing new loan products as required).
The Committee’s minutes are received by the Board and each year the Committee reports on its work to the members at the AGM.
Those who serve on the Committee are volunteers. Training is available through ABCUL.
The Personnel & Training Committee
The Committee comprises four directors who are appointed by the Board for a one year term. The Vice President normally chairs this committee which meets at least four times a year.
Their role is to consider all matters relevant to the Credit Union’s status as an employer, such as updating employment policies, reviewing staff pay, terms and conditions, and deciding on any proposals from the Chief Executive for changes to the staffing structure. The Committee is also pro-active in overseeing the training and development of staff and making sure any changes to employment law are observed.
The Audit & Risk Committee
This Committee comprises five directors and is chaired by a director with an accounting qualification. Committee members serve for one year and there are at least four meetings.
The Committee is responsible for monitoring the Credit Union's internal and external audits and making recommendations to the Board on these matters. It also reviews the key risks facing the business and considers reports from Management on how their probability and impact are managed. The Committee can, as required, call upon experts in areas such as health and safety, and IT, and advises the Board on relevant risks before deciding to proceed with any strategic transactions such as asset acquisitions, mergers and disposals.
The Chief Executive
The Credit Union’s overall manager, the Chief Executive acts as a vital link between the elected directors and the staff team. The person occupying this role must provide sound leadership and professional skills and be able to represent the business at a range of external events.
The Chief Executive’s role is to lead the Management Team; provide quality professional advice to the Board of Directors to help it to make good business decisions; implement the agreed Business Plan and act as Compliance Officer to make sure the Credit Union observes all relevant laws, regulations, rules and policies.
The Chief Executive reports to the Board with regular monitoring information and communicates the Board’s decisions to the staff team, motivating and supporting them to carry out the agreed plans and policies for the benefit of our members.
Every year our Board of Directors approves an updated three-year Business Plan which sets out our long -term vision (what we are aiming to achieve as a credit union), and describes our strategic plans and objectives (how we intend to get there), and the resources we need (the people, premises and equipment we will deploy to help us). It also explains how will measure our success and check our progress.
How do we write our Business Plan?
Creating the Plan starts in the spring when the directors hold a Strategic Planning Event (sometimes called an Away day). The directors spend a day reviewing how things are going and what we’ve achieved already and looking at the prospects for future years.
They assess what is happening in the wider world - the local, regional and national economy, the financial services industry, the political scene - and how we are performing as an organisation. They learn about new ideas and developments, for example things that other credit unions in Britain and around the world are doing, such as launching new products and services or improving the way they serve their members. Results of any Member Surveys and the views of our staff and volunteers are also carefully studied.
Based on the outcome of the Planning Event, the Chief Executive then updates the Business Plan and rolls it forward a further year (each Plan covers three future years), for the Board to approve in July.
The next step is to prepare an Annual Budget setting out the money the credit union expects to spend to make the Plan happen. The Board approves the Budget in September, and it takes effect at the start of the next financial year - on 1st October.
How do we monitor our Plan?
After writing a Plan and Budget, it would be easy to say “job done” and file it neatly away on the office shelf. But any Plan, if it is to come to life, must be constantly referred to, and regularly used to check progress.
So, at each monthly Board meeting, an important task for the directors is to check how the Plan is going, examine with the Chief Executive any areas where progress is slipping, and decide what action to take. In this way, when the three years are up, there will be no surprises, and everything possible will have been done to achieve the Plan. Of course, sometimes unforeseen events do crop up that require the original plans to be revised, tweaked or even scrapped. But at least these changes are properly considered and their impact on the Plan understood.
The progress made with the first year’s plans and objectives then feeds into the next update, the following spring, when the whole planning process begins again!
What is in our current Business Plan 2016-19?
The overall vision of Hull & East Yorkshire Credit Union is to be:
“A sustainable member-owned organisation providing high quality services and shared benefits that improve the financial well-being of all who choose to join.”
We will achieve this by:
To fulfil this vision, we set out our objectives in four separate categories - Operations & Finance, Business Development, People and Governance. Here is what we plan to do in Year 1 - 2016 to 2017:
Operations & Finance
HEYCU’s business model is to manage its members’ shares and deposits, and loans to members, so that it earns income from the margin between interest and fees receivable and dividends payable, to cover its operating costs and strengthen its capital reserves. As with any business, HEYCU is faced with a range of risks which must be managed carefully to ensure the future sustainability of the organisation.
Our Credit Union has a Risk Management Strategy which:
The Board’s Audit & Risk Committee regularly reviews the Risk Register and oversees policies and action plans to manage the top risks, which are as follows:
|Risk||Description of Risk||How it is managed|
|Data Security Risk||The impact of loss or theft of customer data or breach of confidentiality.||Data Protection and Security Breach Policies.
Office rules on disposal of confidential waste.
IT security measures.
Staff training and briefings.
|External Events Risk||Loss or disruption caused by fire, flood, burglary, robbery etc.||Business Continuity Plans.
Alarm and controlled entry systems.
Local rapid response systems.
Asset registers and inventories.
|Credit Risk||Losses resulting from failure by borrowers to repay their loans.||Loans and Credit Control Policies.
Loan decision tools.
Provisions for doubtful debts.
Experienced credit controller.
Debt recovery services.
|Market Risk||Losses caused by changes in interest rates, returns and property values.||Regular management reviews of changing market conditions, yields, rates, charges etc|
|Invested Funds Risk||Loss of funds where not covered by FSCS or government “bail outs”.||Investment Policy.
Diversity of portfolio.
Management review of invested funds.
Awareness of changing financial ratings of institutions invested in.
|Strategic Risk||Potential losses from failure of strategic projects to deliver their expected benefits.||Management and Board reviews.
Strategic Planning Event.
Plans and budgets.
Close liaison with partner organisations.Marketing activity.