Islay & Jura Credit Union

Islay & Jura Credit Union is a community credit union for people who live or work on Islay or Jura. It does two main things: it takes savings, and it makes loans. Both come with free life cover attached, which is unusual for a bank account and is one of the reasons people use a credit union rather than a high street bank¹.

Membership costs £1.00 for new members, plus a minimum of £1.00 to open your savings, and there is an annual administration fee set by members at the AGM³. You must be at least 16 and live or work on Islay or Jura to join⁴. Savings are your shares in the credit union, and they are the basis on which your eligibility for loans is calculated¹.

The credit union is regulated by the Financial Conduct Authority and the Prudential Regulation Authority, and savings are protected by the Financial Services Compensation Scheme³. It is affiliated to ABCUL and is a FairLife member⁶.

What Islay & Jura Credit Union offers

The credit union's own list of what it provides is short: savings, loans and free life insurance⁷. That is the shape of most credit unions in the UK, which all offer savings and loans and many add products such as junior savings accounts, Christmas savings accounts, prepaid debit cards, insurance products and cash ISAs⁸.

For Islay & Jura specifically, the three product areas are:

• Savings, held as shares, with free life savings insurance attached¹
• Loans, unsecured or secured against your shares, with free life insurance built in up to the age of 80⁶
• Life savings and loan protection benefits, which pay out on death or, in limited circumstances, on accidental injury²

Credit unions in Northern Ireland have a remit to offer a range of basic financial services such as share accounts, loans and life assurance, and the maximum interest a credit union there may charge on loans is set by law¹⁰. Islay & Jura is in Scotland, so the Northern Ireland rules do not apply to it, but the same principle of a capped, community-based lender runs through the whole credit union movement. The credit union itself publishes the terms that apply to its own accounts, and it is the place to ask for the figures that apply to you today.

If you are comparing this with a bank, the current accounts guide covers what a bank account does that a credit union share account does not, and the savings guide covers the wider savings market.

Savings are shares in the credit union

Your savings are your shares in the credit union, and they are the basis on which your eligibility for loans is calculated¹. That is not a marketing phrase: it is how the structure works. Every £1 you save is a £1 co-operative share, which is why the main savings account at a credit union is often simply called a share account¹¹.

You can deposit as much or as little as you like each time, in cash or by cheque at a Collection Point, by Standing Order from your bank, or a combination of the two¹. There are two Collection Points where you can pay in cash or cheques¹.

A dividend may be paid if the credit union makes sufficient profit¹. Credit unions normally pay a dividend once a year, and the amount depends on how much you have saved and how much profit the credit union has made¹². It is not interest, it is not guaranteed, and it is approved by members at the AGM¹⁴. Some credit unions also pay a loan interest rebate, a refund of loan interest paid to all members who borrowed during the preceding financial year¹⁵.

Free life insurance on your savings: how the benefit works

Your credit union savings are automatically covered by life insurance at no cost to you¹. All members automatically enjoy free Life Savings and Loan Protection benefits⁷. Unlike bank accounts, credit union accounts provide free life savings insurance at no cost to the member⁷.

The benefit works like this. When you joined, you nominated a person. If you die, that person receives your shares, plus an additional lump-sum payment². The size of the extra payment depends on when the shares were paid in:

There are two further payments. If a member under the age of 65 dies as the result of an accident, an additional 100% is paid². The cover also covers members under 65 for the loss of a limb or an eye as the result of an accident, paying a sum equal to 50% of shares².

The benefit is capped. There is no limit on how much you can save, but currently only the first £7,500 will attract the Life Savings benefit³. Savings above that figure remain your shares and still count towards your borrowing, they simply do not attract the extra insurance payment.

This kind of cover is common across the movement rather than unique to Islay & Jura. Credit unions generally insure savings at no direct cost to eligible members, paid in addition to the savings held at the time of death¹⁶.

Islay & Jura Credit Union loans

A loan from Islay & Jura Credit Union is described by the credit union as a cost-effective way of borrowing, with no penalty for early repayment⁷. There is no lower limit on the amount you can borrow, unlike most banks and other lenders⁶.

For a first loan, you may apply for an amount up to one and a half times the total of your savings⁶. More generally across the credit union movement, members can usually borrow at least two or three times the amount they have in savings, depending on the loan policy of the individual credit union¹².

The practical features are:

• Repayment level: you choose the level of repayment which suits your circumstances⁶
• Payout: by cheque, or directly into your bank by BACS, as you prefer⁶
• Repayments: by cash or cheque at the Collection Points, or by Standing Order from your bank⁶
• Early repayment: no penalty⁷
• Income check: anyone applying for an unsecured loan, meaning a greater amount than their total savings, is asked to provide a brief summary of income and expenditure on the application form³

To apply, you complete a simple application form, and a medical form if required, and hand it in at a Collection Point or post it, enclosing your passbook⁶. The credit union normally processes loan applications in a week, and loan agreements are normally available for signing the following week³.

If you are weighing this against other borrowing, the loans guide sets out how personal loans work and the debt guide covers what to do if repayments become difficult.

Loan protection insurance and its age limits

Loans from Islay & Jura Credit Union come with free life insurance built in up to the age of 80, and there is no penalty for early repayment⁶. Life insurance is included at no cost to the borrower⁷. Across the movement, when you borrow from a credit union you normally get free life insurance to cover the value of the loan, so the loan is repaid if you die before paying it back in full⁸.

The age rules matter, and they are worth reading before you borrow:

• The credit union is unable to insure loans for members once they reach their 80th birthday³.
• For members aged 80 and over, any outstanding amount will be deducted from your share balance, meaning your savings³.
• Because of that, the credit union can only offer secured loans to members aged 80 and over³.
• Pre-existing conditions are not covered for the first six months of a loan².
• If you die from a pre-existing health condition within the first six months of a loan, the outstanding amount will be deducted from your share balance. After six months, provided the health declaration form was completed correctly, the loan will be covered by the credit union's insurance³.

The cover also does more than repay the loan. It helps to ensure your loan is repaid, allowing the full amount of your savings, plus the life savings benefit, to be paid to your nominated person².

Membership fee and annual administration charge

There is a £1.00 membership fee for all new members, and an annual administration fee to help cover running costs³. You also need £1.00 to start your savings⁴.

The annual administration fee is not a fixed published figure in the credit union's own information. The amount is agreed by members at the AGM, which means it is set by the membership rather than by the board alone³. If the exact current figure matters to you, it is worth asking at a Collection Point before you join.

For comparison, membership fees at credit unions vary. The point of the fee is the same everywhere: credit unions are not-for-profit and owned by their members, so running costs are met from member contributions rather than from a profit margin.

Who can join: living or working on Islay or Jura

To be eligible to join, you must be at least 16 years old and live or work on Islay or Jura⁴. The credit union describes its common bond as a Live or Work common bond³.

A common bond is the defining feature of every credit union in the UK. All credit unions in the UK may only accept members who have a common bond⁹. Anyone can become a member, but you must share a common bond with other members, such as living in the same area or working for the same employer⁸.

Two things follow from that. First, if you move away from Islay or Jura and stop working there, your eligibility to join as a new member would not be met, though the credit union's own rules govern what happens to existing members. Second, family members living at the same address can usually join if one family member meets the common bond and has joined⁸. That is a general feature of credit unions rather than a rule specific to this one.

You can be a member of more than one credit union, provided they are of different types³. Each has its own common bond, so you would need to qualify for each separately.

How to join and pay in at a Collection Point

Joining is done on paper and in person. You complete a membership form, which can be obtained at one of the Collection Points or printed at home, and take it to a Collection Point with photo identification and proof of address dated within the last six months⁴.

A driving licence is ideal because it shows both your identity and your address, but a passport, bus pass, Young Scot card or similar are all acceptable⁴. Across credit unions generally, two recent documents are usually needed to prove identity and address, for example a passport, driving licence, student or work ID card, bus pass, birth certificate, bank statement or energy bill¹⁸. Banks take a similar approach, usually asking for a driving licence or passport, or a photo if you are applying online¹⁹.

Once your application has been processed, you are issued with a passbook in which all your future transactions should be recorded⁴. You bring it to a Collection Point, and you enclose it when you apply for a loan or a share withdrawal⁴. It is the paper record of your shares, which is why it matters more here than a statement would at a bank.

To pay in, you can use cash or cheques at either of the two Collection Points, set up a Standing Order from your bank, or use a combination¹. Loan repayments work the same way: cash or cheque at the Collection Points, or a Standing Order⁶.

How your savings are protected

Savings with Islay & Jura Credit Union are protected by the Financial Services Compensation Scheme⁶. That is the same scheme that covers money in banks and building societies, and it is the main protection a saver should check for⁸.

The credit union is regulated by the Financial Conduct Authority and the Prudential Regulation Authority³. It appears on the FCA Register as Islay & Jura Credit Union Limited, authorised since 2 July 2002, with permission to accept deposits, firm reference number 214006⁵. It also appears on the Bank of England's list of UK-incorporated credit unions regulated by the PRA²⁰.

There is a second layer of protection specific to credit unions. It is a legal requirement that all credit unions must have insurance in place, to cover members in the event of dishonesty or robbery³.

If you are worried about a loan you cannot repay, or about borrowing from someone unlicensed, free and impartial help is available. The Consumer Council for Northern Ireland publishes guidance on illegal lending and where to get help²¹, and debt advice charities can review your options. The credit unions guide explains how the movement works more broadly, and the consumer protection guide covers the ombudsman and compensation schemes.