Orchard Credit Union

Orchard Credit Union is a UK credit union offering the two things credit unions are built around: savings accounts and loans. All credit unions offer savings and loans, and Orchard is no exception¹. It is a member-owned organisation rather than a bank, which shapes almost everything about how it works: the people who save with it are the people who own it, and the money it lends out comes from members' savings rather than from outside investors³.

If you are looking for what it offers, the short answer is a share account you pay into, loans you can repay early without penalty, and an annual dividend paid on your savings if the credit union makes a surplus. Orchard Credit Union describes its loans as having no hidden fees or charges, and says you can pay a loan off early, make additional lump sum repayments or increase your regular repayments without penalty². Membership carries a possible annual fee, and there is a minimum balance to hold in your share account; the credit union's own membership terms set out how both work and the current figures¹.

This page covers each of those in turn: what the products are, how the charges work, who can join, how to open an account, how to pay in and take money out, what happens if an account goes dormant, how to complain, and how your money is protected.

Savings and loans at Orchard Credit Union

Credit unions exist to do two things: take in members' savings and lend to members who need to borrow. All credit unions offer savings and loans, and the savings of one member are what fund the loans of another². Orchard Credit Union's own loan page puts it plainly: all loans are provided from the savings of other members⁵.

Savings sit in what credit unions call a share account. You must hold a minimum balance in your share account with Orchard Credit Union, and the current figure is set out in its membership terms¹. That share is your membership stake in the organisation, not just a deposit. Credit unions offer a range of savings accounts, and larger ones add services such as Christmas savings accounts, ISAs, budgeting accounts and, at some, current accounts². Services vary by branch, and can include savings accounts, loans, foreign exchange and prepaid debit cards⁷.

On the borrowing side, credit unions offer loan products suited to individual needs and at rates members can afford⁸. Orchard Credit Union's loans are described as straightforward, with no hidden fees or charges, and flexible, in that you can pay off early, make additional lump sum repayments or increase your regular repayments without penalty². If you opt for weekly repayments, your first repayment is due within one week of your loan being issued; if you opt for monthly repayments, your first repayment is due on the same date each month as your loan was issued².

For the wider picture of how these accounts compare with banks and building societies, see savings accounts and loans, and for the movement as a whole, credit unions.

Loans: no penalty for paying off early

The feature most people ask about is early repayment. Orchard Credit Union states that you can pay off your loan early, make additional lump sum repayments or increase your regular repayments, all without penalty². That is a meaningful difference from many bank and building society loans, where settling early can trigger an early repayment charge.

The repayment schedule is set when the loan is issued. Weekly borrowers have their first repayment due within one week of the loan being issued; monthly borrowers have their first repayment due on the same date each month as the loan was issued². After that, the rhythm is fixed unless you choose to overpay.

All loan applications are subject to a credit check, and the loan committee reserves the right to request three months' bank statements to verify information provided on any application². Orchard Credit Union also states that all decisions are taken locally, in the best interest of all members². In the wider movement, loan applications are typically considered by a loans committee, with counter staff not involved in such decisions⁹.

If you are comparing borrowing options more broadly, the loans guide sets out how different types of loan work, and the debt guide covers what to do if borrowing has become difficult to manage.

How the membership and account charges work

Orchard Credit Union does not publish a long tariff of fees, but its terms allow for two annual charges. The board of directors can exercise its right to charge an annual membership fee for each active member's account, and an annual administration fee for each dormant account¹. Both are described as rights the board can exercise rather than charges that are automatically applied, and the current amounts are set out in the membership terms¹.

There is also a charge for a copy of the records held about you. Under data protection legislation, you can make a written request for a copy of the records Orchard Credit Union holds about you, and the terms state the charge for this¹.

On the loan side, Orchard Credit Union states there are no hidden fees or charges on its loans². That is the credit union's own description of its lending, and it sits alongside the early repayment flexibility described above.

For comparison, other credit unions structure their charges differently. One charges an annual membership fee¹⁰, another applies an administration charge for closing an account within 12 months of starting membership¹¹, and another advertises no transaction fees or charges at all¹². The pattern across the movement is that charges are few, small and disclosed in the membership terms rather than applied to everyday transactions.

Dividends: how they are declared and paid

A dividend is the credit union equivalent of a profit share. Credit unions normally pay out a dividend to members once a year, and the amount depends on how much you have saved and how much profit the credit union has made¹³. Surplus income generated is returned to members by way of a dividend or directed to improved or additional services for members¹⁴.

At Orchard Credit Union, the process is set out in the membership terms. If a surplus has been achieved, the board of directors recommends the rates of dividend payment for agreement by members at the annual general meeting, which is held during the six months following the accounting year end of 30 September¹. Dividend is then paid to those in membership on the working day after the date the dividend is declared¹. New members who join after the accounting year end but before that year's AGM are paid after the following year's AGM¹.

There are conditions attached. An annual dividend can only be paid to active members' accounts. Accounts closed after the financial year end but before the dividend is credited forfeit the dividend, as do members who close during the financial year, and no dividend is paid to any member with a current bad debt within the credit union¹.

On tax, dividends and interest are paid gross of any tax but are not tax free, and Orchard Credit Union's terms state that you must declare your dividends and interest on your tax return if applicable¹. The same rule applies across the movement: a credit union does not, by law, have to deduct tax, and it is the member's responsibility to declare their dividend¹⁵. Dividends are not guaranteed; at other credit unions they are described as subject to surplus and approval by members at the AGM¹⁶.

Who can join: the common bond

To become a member of Orchard Credit Union, a person must meet its common bond requirement¹. That is the defining feature of the whole movement: all credit unions in the UK may only accept members who have a common bond¹⁷. Anyone can become a member, but you must share a common bond with other members, such as living or working in a particular area¹⁸.

Common bonds take several forms:

• Living, working, studying or volunteering in a certain area¹⁹
• Working in the same industry or for certain employers¹⁹
• Belonging to the same trade union¹⁹
• Being employed by one of the credit union's employer partners¹⁶

There is usually a route in for people close to a member. Anyone in the house of a person with a common bond with a credit union can usually join¹⁷. As long as one member of a family meets the common bond requirements and has joined the credit union, the other family members living at the same address can usually join too³.

Orchard Credit Union also runs junior accounts. At the age of 16, it writes to advise that the junior account may be eligible for conversion to that of a full member, subject to meeting common bond requirements and suitable identification¹. If you are not sure which credit union covers your area, the credit unions guide explains how the common bond works in practice.

Opening an account and proving your identity

Orchard Credit Union is required by law to verify the identity and address of all new members, and sometimes of existing members who wish to continue to operate an account¹. It has a legal obligation to ask all new account holders for acceptable identification and separate verification of their current permanent address before opening an account³.

In practice, credit unions usually ask for two recent documents to prove your identity and address, for example a passport, driving licence, student or work ID card, bus pass, birth certificate, bank statement or energy bill¹⁹. Other credit unions in the movement accept a current, valid passport, a current, valid driving licence, an electoral or student card, or a Translink ID card for adult accounts⁷. Identity and address are typically verified by copy of statements or a driving licence, sent by email or post or uploaded to an online account¹¹.

Orchard Credit Union has a specific policy on photographs. It obtains and retains up to date photographic identification on members' computer accounts, but does not retain photographs of accounts under the age of 16 years, using the signing parent or guardian's photograph instead¹.

Two practical points are worth knowing. First, the credit union may refuse to accept a registration form, or a request for registration, in its absolute discretion without assigning any reason³. Second, if you are asked to prove your identity for another purpose, a credit union statement is accepted as a financial statement for some official identity checks²⁰. If you are worried about identity documents being misused, the scams and fraud guide covers what to do.

Paying in and taking money out

Orchard Credit Union's terms set out how money moves in and out. Funds paid in by standing order are available for you to withdraw on the same day as receipt¹. When a cheque is received, funds will be available to withdraw within four working days¹. For context, a payment can take three working days to clear in the wider banking system⁷.

Withdrawals through the online service are capped. Members can carry out online withdrawals up to a daily limit set out in the terms¹. Any instruction for an account transfer or other transaction involving a withdrawal received through the services requires the member to have sufficient cleared funds in the account, or a sufficient overdraft or other limit available on the account³. Requests by a member for payments may be made only to the designated bank account of the member, subject to prior notice in writing to the credit union³.

Other credit unions in the movement accept money in by standing order, in branches using cash, cheque or debit card, by telephone using a debit card, and online via the website or member area¹². Credit union accounts commonly allow you to pay in or take out cash at the credit union, have money paid in such as wages, benefits and pensions, and use online, mobile or telephone banking, along with budgeting advice and support¹⁹.

Orchard Credit Union's online services give access to information on a member's account, including the balance and details of recent transactions, the ability to request statements, and the ability to apply for or access personal loan facilities³.

Dormant accounts and what happens to them

If you do not make any transactions on your member account for a period of 36 months and you do not respond to correspondence, your account will become dormant and will be placed in a suspense account¹. Once dormant, the board can charge an annual administration fee for each dormant account¹.

Dormancy is not unique to Orchard Credit Union, and it is not necessarily permanent. At another credit union, no transaction can be made on a dormant account unless the requested ID and address evidence is provided⁷. The Financial Ombudsman Service has dealt with cases where a customer's account was classified as dormant because it had not been used for several years, and the consequences that followed²¹.

The practical step is to keep the credit union informed of your current address and to make some use of the account, even a small transaction, if you want to avoid the dormancy process. If you have an account you have not used for a long time, contacting the credit union with up to date identification is the route back to normal operation.

Complaints and the Financial Ombudsman Service

If something goes wrong, Orchard Credit Union has a set complaints process. It will send a written acknowledgement within five working days and keep you informed on progress until your complaint is resolved¹. If you remain unhappy with its final response, or if eight weeks have passed since you first raised the matter, you may refer it to the Financial Ombudsman Service¹.

The Financial Ombudsman Service is free to consumers and can look at complaints about financial firms. You can fill in its complaint form to start the process²². It can also consider complaints where a consumer feels they were given unaffordable credit, or that the lender acted irresponsibly in providing the product²³. Where a complaint about a bank, building society or credit card company has not been resolved by the firm's own complaints procedure, the ombudsman can consider whether the terms of the Standards of Lending Practice have been broken²⁴.

If a debt collector or creditor has behaved in a way you think is harassment, there is separate guidance on what counts and what you can do²⁴. The consumer protection guide sets out the wider framework of rights and remedies that applies across UK financial services.

How your savings are protected

Credit union savings are protected by the Financial Services Compensation Scheme, the same scheme that covers bank and building society deposits²⁵. All shares, meaning savings, in an affiliated credit union are eligible for protection under the Financial Services Compensation Scheme¹⁴. One credit union describes its savings as fully protected by the scheme up to £85,000²⁵.

Orchard Credit Union is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority¹. Its firm reference number is 574017, and it appears on the Financial Services Register with permission to accept deposits⁴. It also appears on the Bank of England's list of credit unions incorporated in the UK, with the same reference number²⁶.

Two limits are worth knowing. First, the compensation limit applies per person, per institution, so money held across brands that share a licence counts together towards the same limit. Second, the scheme protects deposits and savings, not the dividend, which depends on surplus and is not guaranteed¹⁶.

Orchard Credit Union's website terms also contain a liability exclusion: it accepts no liability for any losses or damages arising out of errors or omissions contained on the website³. That is a website disclaimer rather than a limit on the protection of your savings, but it is worth reading alongside the membership terms. For the full picture of how compensation works, see consumer protection.