Sion Mills Credit Union

Sion Mills Credit Union is a not for profit community lender based in County Tyrone, Northern Ireland. It offers the two things every credit union offers: savings accounts and loans. It is a small, local organisation rather than a bank, and its members share a common bond, which in practice means living or working in its part of Northern Ireland.

The credit union says it offers low cost unsecured personal loans available for just about any purpose, with fixed interest rates and no hidden fees or early repayment charges¹. On the savings side, you can save from as little as £10 up to £15,000, and the credit union pays a dividend on savings agreed at its annual general meeting rather than a fixed rate of interest².

It is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, and savings are covered by the Financial Services Compensation Scheme³.

What Sion Mills Credit Union offers: savings and loans

Credit unions exist to do two things: take in members' savings and lend those savings back out to other members who need to borrow⁴. Sion Mills Credit Union is no different. Its permitted business is deposit taking, and it describes itself simply as offering savings and loans³.

That model matters to a saver, because it explains where the money goes. Members' savings are used to fund loans to other credit worthy members of the same credit union⁵. Your money is not being invested in markets or lent to strangers elsewhere; it is circulating inside a small local organisation whose members all share a connection.

Credit unions are not for profit community lenders, providing affordable loans and savings⁶. Larger credit unions sometimes add extra services such as Christmas savings accounts, ISAs, budgeting accounts, current accounts and debt management, but these vary by credit union and are not automatic⁷. Sion Mills Credit Union's own product range is savings and loans.

If you are weighing up whether a credit union suits you at all, the wider guide to credit unions sets out how the sector works, and the savings and loans guides cover those products in general terms.

Savings accounts and how the dividend works

Sion Mills Credit Union says you can save from as little as £10 per month, up to a maximum of £15,000². That ceiling is set by the credit union itself. Credit unions may have their own limits as to how much you can save, and those limits differ from one to another, as the table below shows⁸.

The return on a credit union savings account is not interest in the usual sense. Sion Mills Credit Union explains that credit unions traditionally do not pay interest on savings; instead, depending on how the credit union has performed, a dividend is paid on savings and agreed at the AGM². A credit union will normally pay out a dividend to you once a year, and the amount depends on how much you have saved and how much profit the credit union has made¹². Profit shares distributed among credit union members annually are known as a dividend⁸.

Two things follow from that. First, the dividend is not guaranteed: it depends on the credit union's performance and on members approving it at the AGM⁸. Second, it is decided once a year rather than accruing monthly, so a saver who needs a predictable return should understand that this is a different arrangement from a bank account paying a stated rate.

Withdrawing your money is straightforward. Sion Mills Credit Union says you can access your money by fee free transfer to any UK bank account². Credit unions more widely pay out by:

• cashing a cheque at a local Post Office
• cash at a local credit union office
• payment directly into a bank account
• debit card at a cash machine, if the credit union operates a current account⁷

Ask the credit union which methods it currently offers.

Free life insurance on savings and its restrictions

Sion Mills Credit Union attaches free life insurance to savings. It says the insurance pays up to 100% on top of your savings to your chosen beneficiary in the event of your death². In other words, a named person receives the savings balance plus a matching sum, subject to the scheme's rules.

There are limits. The credit union states that certain restrictions apply based on your savings balance and on your age at death or your age when the savings were made². Those restrictions are set out in the scheme terms rather than in headline figures, so a member who wants to know how the cover would apply to them needs to read the terms or ask.

The same idea runs through the sector. Most credit unions offer free life or loan protection insurance⁷, and individual credit unions describe free life insurance on loans and savings as giving considerable reassurance¹⁵. It is one of the practical differences between saving with a credit union and saving with a bank.

On the loans side, Sion Mills Credit Union provides free life insurance on all loans taken up to the member's 85th birthday, so that in the event of the unforeseeable the debt is wiped off, subject to terms and conditions¹. That means a borrower's family is not left repaying a credit union loan after the borrower dies, provided the loan was taken within the age limit and the conditions are met.

The insurance is arranged as part of membership rather than sold as a separate product, and the credit union does not underwrite it itself. The terms, including the age and balance restrictions, are the ones that decide whether a claim is paid.

Personal loans: how applications are assessed

Sion Mills Credit Union offers low cost unsecured personal loans which are available for just about any purpose, with fixed interest rates and no hidden fees or early repayment charges¹. It arranges loans with repayments from 6 months to 5 years¹⁶. It also says it often lends to people who may have difficulty borrowing elsewhere, including people on benefits or tenants¹⁶.

How much you can borrow is not decided by a table. The credit union says there are no hard and fast rules about how much a member is entitled to borrow, and that every loan application is treated strictly on its own merits, subject to terms and conditions¹⁷. That is consistent with how credit unions generally work: they always consider affordability when assessing loan applications⁶, and applications are assessed on an individual basis¹⁸.

In practice, an assessment looks at more than a credit score. One credit union describes assessing an application on your credit file, affordability and your personal circumstances, not just your credit file alone¹⁹. Credit unions normally use manual checks to decide whether to lend, and you usually will not have to pass a credit check even if you apply for an overdraft⁴.

That said, a credit check is not off the table. Sion Mills Credit Union says it may make searches about you at credit reference agencies, which supply credit information and Electoral Register information; those searches are recorded whether or not the application proceeds, and credit scoring methods may be used to assist the application and verify identity³. Other credit unions are more explicit: one says it will run a credit check on your first loan application and may run one on any application²⁰, and another says a full application triggers a hard credit check that is recorded on your credit file and may be visible to other lenders²¹.

If you are comparing borrowing options, the loans guide covers how lenders assess applications, and the credit scores guide explains what a search does to your file. Where a loan is being used to consolidate existing borrowing, the debt guide sets out the alternatives.

Membership fee and other charges

Sion Mills Credit Union does not publish a membership fee on the pages summarised here, so the amount you would pay to join is something to confirm with the credit union directly. Credit unions do commonly charge one. One credit union charges a £1.00 membership fee for all new members, plus an annual administration fee to help cover running costs, with the amount agreed by members at the AGM²².

On borrowing, the credit union's stated position is that its loans carry fixed interest rates and no hidden fees or early repayment charges¹. That means paying a loan off early does not trigger a penalty, which is not true of every loan on the market.

Because charges vary between credit unions and can change, the figures that apply to you are the ones Sion Mills Credit Union gives you when you apply. Its own website is the place to check today's terms.

Who can join: the community common bond

Anyone can become a member of a credit union, but you must share a common bond with the other members⁷. All credit unions in the UK may only accept members who have a common bond²³. That bond can be based on:

• living, working, studying or volunteering in a certain area
• working in the same industry or for certain employers
• belonging to the same trade union⁴

Sion Mills Credit Union is a community credit union, so its bond is geographic. If you live or work in its area of County Tyrone, you are likely to be within it. The credit union's own site and staff are the definitive check on whether your address qualifies.

The bond is wider than it first appears, because it extends to households. Anyone in the house of a person with a common bond with a credit union can usually join²⁴. As long as one member of a family meets the common bond requirements and has joined, the other family members living at the same address can usually join too⁷.

Credit unions also differ in who they will lend to. Sion Mills Credit Union says it often lends to people who may have difficulty borrowing elsewhere, including people on benefits or tenants¹⁶. That is a deliberate part of the sector's purpose: credit unions historically offered simple savings and loan products to financially excluded individuals²³.

Opening an account: ID and proof of address

Joining means proving who you are and where you live. The credit union asks for photographic ID such as a valid passport or driving licence, and for residency one of the following, dated within the last three months where a date applies¹⁷:

• a bank, building society or Post Office statement
• a utility bill
• a letter from the DWP, a council or other government body
• a driving licence

That is in line with what credit unions generally require. You will usually need to provide 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 bill⁴. One credit union asks for two forms of identification, photographic ID and proof of address²⁵.

The practical step is to check before you travel. To become a credit union member you need to visit or call your chosen credit union to confirm what information you need to join⁷. If you are opening an account for a child, the adult opening it will need their own identification and address documents as well²⁶.

Junior accounts for children

Sion Mills Credit Union allows a child's parent, guardian, grandparent or other family member to open an account for a child¹⁷. The adult must present the child's birth certificate or passport, and two forms of ID for themselves, and the sponsor must sign the withdrawal form for the junior account¹⁷.

Across the sector, junior accounts are typically open from birth. One credit union's junior account caters to children from birth until their 16th birthday²⁷, another is available from birth up to the age of 16²⁶, and another provides accounts for those under 18 years of age, with the junior account able to start at birth²⁸. Parents can open savings accounts for children under the age of 16²⁹.

Junior savings usually carry their own ceiling, separate from the adult limit. One credit union caps junior members at £10,000 while adult members can hold £15,000⁹. The dividend treatment is often the same as the adult account: one credit union's junior savings account pays an annual dividend dependent on the credit union's profitability and approval through the AGM²⁶.

For a child, the point of the account is habit rather than return. Junior accounts are described as encouraging early savings habits²⁷. If you are thinking about savings for a child more broadly, the savings and isas guides cover the other options, including tax-free accounts.

Complaints and the Financial Ombudsman Service

Sion Mills Credit Union is a member of the Financial Ombudsman Scheme, which it describes as a free service where an independent person looks at complaints³. If something goes wrong, the first step is the credit union's own complaints procedure.

Its timescales are set out. Within 3 working days from the date your complaint was received, it will either write to confirm that it understands the complaint and has resolved it, or confirm that the complaint is being looked into with the likely timescale for a further response³. It aims to resolve complaints within eight weeks, and you will receive a copy of the resolution in writing; if that is not possible within eight weeks, it will write to explain why and when a final response is expected³.

Those targets match the wider sector and the rules. Credit unions have eight weeks to investigate and give you their final response⁴, and for most complaints a business has up to 8 weeks to consider a complaint³⁰. Other credit unions work to similar internal targets: one resolves most routine complaints within two working days, acknowledges others within five business days, and attempts to resolve the matter within eight weeks of receipt³¹.

If you are unhappy with the final response, or the timeframe has passed, you can take your complaint to the free Financial Ombudsman Service⁴. The ombudsman service considers complaints from consumers and also from microenterprises and small and medium sized businesses³². Complaints are made by filling in the ombudsman's complaint form³³.

The ombudsman can look at a wide range of financial complaints, including banking and payments matters³³. It is a free route and it does not require a lawyer. If a complaint is about a claims company rather than the credit union, the ombudsman can also look at that³⁴.

FSCS protection for your savings

Savings with Sion Mills Credit Union are protected by the Financial Services Compensation Scheme². The credit union states that it is a member of the FSCS, which protects your monies up to £120,000². The scheme exists to protect you if your bank, building society or credit union runs into financial difficulty³⁵.

That protection is a feature of credit unions generally, not something unique to this one. Your savings are protected by the Financial Services Compensation Scheme⁷, and all shares, meaning savings, in an affiliated credit union are eligible for protection under the FSCS⁵. Other credit unions state the same: savings are protected by the FSCS²⁹, and savings are covered by the Financial Services Compensation Scheme³⁶.

Two points are worth being precise about. The £120,000 figure is the limit the credit union itself states for its members' monies². And protection applies to savings, not to everything a financial firm might sell: credit insurance, for example, is not eligible for FSCS protection³⁷. If you hold savings in more than one credit union, each is a separate institution for these purposes, but savings held in the same credit union count together towards the limit.

The credit union's regulatory position is the other half of the picture. Sion Mills Credit Union Ltd is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority³. Its FCA registered number is 213401³, its firm reference number is 576112³⁸, and it appears on the Bank of England list of credit unions incorporated in the UK³⁹. Its website is www.sionmillscreditunion.com³⁸.