Proposed Transfer of Engagement F.A.Q’S

Proposed Transfer of Engagement F.A.Q’

Below are some answers to questions around the proposed Transfer of Engagement/merger of Fusion Credit Union Ltd and CitySave Credit Union.

What is a Transfer of Engagement?

Under a Transfer of Engagement, the assets and liabilities of one Credit Union are transferred into another Credit Union. The proposed case of Fusion and CitySave, it is to improve member service, and maintain a Credit Union presence in South and East Staffordshire. 

Why are the Fusion Board proposing a merger:

• After over 18 years of successful operation serving members in South and East Staffordshire, Fusion has reached a size where it does not have the resource to continue its recent growth or fully service its membership.
• Fusion is run entirely by Volunteers and is one of the few remaining volunteer run Credit Unions in the country. In recent years we have not been able to recruit sufficient volunteers with either the financial ability or commitment to help run the Credit Union.
• Although we are consistently profitable and able to pay a dividend to Members, we do not have surplus funds to invest in the technology to either run our administration more efficiently or provide extra services such as online transactions.
• The regulatory requirements of the Financial Conduct Authority and the Prudential Regulation Authority are ever increasing and require both time of the volunteers and a cost to the Credit Union

Why not employ a member of staff to ease the administrative burden?

The cost of a single member of staff would wipe out any annual profit, make us unable to pay a dividend and rapidly make us insolvent by using up all our reserves.

Who are CitySave?

• CitySave Credit Union (https://www.citysave.org.uk) are based in Birmingham and have a membership base both from city employers and the local community. 
• Currently they serve Birmingham postcodes and Warwickshire.
• They have assets of approx. £10Million and 8 fulltime staff.
• Financially they are sound and run in a prudent manner.
• They have a business plan to extend their community membership.
• CitySave members can access their accounts either online via website, via a new App or via telephone, the office is manned 9am to 5 pm Monday to Friday.

Did you approach any other Credit Unions?

When the Board made the decision to seek a merger partner, we made the announcement through our Trade Body, emphasising that we were not in any financial difficulty. We have been represented at the Trade Body meetings for the last four years and were well known to other local Credit Unions. Four Credit Unions approached us for talks.

Our selection of CitySave as a potential merger partner was based upon -Financial Strength, their desire to expand into the community, personalities of key individuals, technology offerings, and compatible accounting systems.

Will the office at Curborough and the presence at Hednesford Library continue?

CitySave wish to continue with both sites as a Customer support function – advising on savings and loan products, how to use the internet access and mobile app, and upon the benefits of membership.

I have a loan with Fusion, what will happen to it?

Your loan will be transferred to the new enlarged Credit Union on the same interest and same repayment terms. You will be expected to repay your loan.

I wish to have a new loan or a top up loan with the merged Credit Union. How will I do this?

You can apply either via the secure website, the mobile app or by phone to the Birmingham Office. The old Fusion office will be unable to process loan applications but may assist you in the use of the technology.

What will happen to my savings, and are they still protected?

Your savings account will transfer to the new enlarged Credit Union and be protected as before by the Government FSCS (Financial Services Compensation Scheme). You will be able to access your savings via the app, secure website or by telephone during office hours.

Will the new enlarged Credit Union look after our local interests?

At our insistence both CitySave and Fusion have signed a memorandum of Understanding stating that the new Credit Union will continue to provide services and any grant monies already received for the benefit of the local community. 

How is approval of the merger by Members obtained.

Fusion will hold a Special General Meeting to approve the Special Resolution at the top of this bulletin. Two thirds majority of attendees is required.

CitySave will then hold a Special General Meeting to approve a similar resolution. If approved, Fusion will then hold a second Special General Meeting to confirm the Special Resolution where fifty percent majority of attendees required.

When will this happen?

Once the membership of both Credit Unions approve the proposed merger, the proposal must be submitted for approval to the Prudential Regulating Authority (PRA). This may take several months. During that time both Credit Unions will continue to be run entirely separately. Please note that should the circumstances of either Credit Union materially change, either party can still call off the proposed merger up to the final signing.

What happens if this proposed merger does not go ahead?

If Fusion were to continue as it does now, the lack of trained and committed staff may result in future poor service to members, a lack of growth and a rise in expenses and subsequent reduction in capital. Any inability to comply with regulatory returns or breeching solvency requirement may result in the PRA either forcing us into a merger or closing the Credit Union and placing assets into run off (members savings would be returned in full).

If you have questions concerning the above, please do not hesitate to contact the office, either by phone or e mail.

Fusion Credit Union Ltd is Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales No. IP00717C.