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  Issue No 104 Official Organ of LaborNet 27 July 2001  

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Unions

The Workers Bank


With banks on the nose, David Whiteley looks at how unions and super funds have got together to create the real deal - the workers bank.

 
 

Members Equity

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Michael Crosby, co-Director of the Organising Centre, has a penchant for graphs. He has the "scary" graphs on membership decline that scare the living daylights out of union secretaries across the country. But Michael recently found a new graph and began to show it to everyone he met. The graph was a comparison of the Super Members Home Loan (SMHL) interest rate compared to the major banks, RAMS and Aussie Home Loans. The graph showed that SMHL has had the lowest interest rate since March 1996.

The Super Members Home Loans program started in 1994 and was the brainchild of the then ACTU Secretary, Bill Kelty. Since 1994 Super Members Home Loans has advanced more than $5 billion dollars to members. Over the last seven years SMHL's mobile lenders have become well known to union organisers and members.

In August 1999 the SMHL program became part of a new joint venture company called 'Members Equity'. The business is now 50% owned by 44 mainly industry superannuation funds and last week was issued with a banking licence by APRA.

Why has Members Equity become a bank?

There are three reasons why Members Equity sought a banking licence.

The bank licence is in part a response to the trend within the finance sector for financial institutions to become 'one-stop shops' and offer a range of financial services including banking and super. By using the close links with unions and super funds Members Equity is confident it will be able to offer competitive banking products to members.

Secondly, Members Equity is focused on achieving profitable growth for its shareholders. It is worth noting that Members Equity has historically provided the 100 investing super funds in the Super Members Home Loans program with returns that are better than the benchmark for their asset class.

Thirdly, Members Equity hopes to be able to place greater competitive pressure on the existing banks. The success of their mortgage business indicates that Members Equity will be able to achieve this goal, one that is in the national interest. They plan to launch a savings account to existing customers in August than roll out a personal loan facility and a competitive credit card product.

Will they be different from other banks?

In conducting their home loan business Members Equity have demonstrated a capacity to act differently from other financial institutions. Recent media reports that in 2000 the major banks charged $6.3 billion in fees provides a stark comparison with the philosophy of Members Equity. During the same period ME removed its home loan application fee, in response to feedback from its customers, unions and super funds.

Members Equity will provide Australian families with low cost easy to understand banking services. This clearly explains a focus to provide their customers with straightforward and easy to understand products. Their past performance demonstrates that union members can be confident that they will not be slugged by hidden fees and costs.

Members Equity places the interests and needs of its customers on an equal footing with its shareholders. A central part of the Members Equity business strategy is that their customers are genuinely valued and can contribute to the development of a sustainable banking business. They are aware of community antipathy towards the existing banks and have a strategy that can take advantage of this.

Members Equity will only have a modest branch network with offices in every state. Customers will be able to complete their transactions over the internet, at Australia Post outlets and using ATMs. Members Equity have a constructive relationship with the Finance Sector Union (FSU) and were the first company to sign the ACTU Call Centre Code of Conduct. They are currently negotiating their enterprise agreement.

The Role for Unions

For the ACTU and unions a unique opportunity exists. We will be able to offer members the full suite of banking services provided by an organisation that we know can deliver; we have strong historical ties with; and that is 50% owned by Australian workers.

Super Members Home Loans and Members Equity have demonstrated over the past seven years that they can deliver an outstanding service to union members, and one that union secretaries and organisers can promote to members with confidence. In my role I am acutely aware that when endorsing a service the priority for a union secretary is that he or she does not end up with egg on their face. Members Equity have proven themselves in this regard.

The ACTU and unions have made a significant contribution already to the development of the home loan business for Members Equity. We have been able to offer to union members arguably the best home loan product on the market. The achievements of Members Equity is one that every supporting union and labor council can be proud.

The ACTU, through Member Connect, will continue to work closely with Members Equity, and will seek to help them in whatever way we can to provide low cost banking services to union members. Our priority in this venture is to ensure union members are able to gain further benefit from their union membership.

The workers bank is now a reality. We have a financial institution that we are proud to promote as our own, one that builds on the success of the industry funds and that is committed to providing union members with practical, low cost banking services. Unions should be proud of their significant role in the achievements of Members Equity.

David Whiteley is the General Manager of ACTU Member Connect. Member Connect is the commercial arm of the ACTU and is owned by the ACTU and 16 unions. David has a home loan with Members Equity.

ACTU Member Connect : 1300 362 223 - http://www.memberconnect.com.au


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*   http://www.membersequity.com.au

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*   View entire issue - print all of the articles!

*   Issue 104 contents

In this issue
Features
*  Interview: A Super Agenda
Labor's federal spokesman on superannuation Kelvin Thompson outlines the challenges a Beazley Government will face in managing the nation's savings.
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*  E-Change: 1.4 The Shifting Sands of Ideology
Peter Lewis and Michael Gadiel conclude the first part of their study of new politics by looking for core Labor values in a post-Cold War environment.
*
*  Corporate: Locking Horns
The same names keep cropping up in the business pages as the web of corporate control stays tied to a few big players. Georgina Murray has been looking at the extent and depth of the connections.
*
*  Unions: The Workers Bank
With banks on the nose, David Whiteley looks at how unions and super funds have got together to create the real deal � the workers bank.
*
*  International: Phil Davey's Amazon Postcard
The CFMEU's Boy Wonder has downed the megaphone for three months in South America. Here's what he's been up to.
*
*  History: Faded Vision of The American Bounder
King O'Malley was an American ex-pat who dreamed of a people's bank. Neale Towart looks at what happened to his vision.
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*  Activists: The Big Gee-Up
With the big guns of the anti-corporate movement in town, Mark Hebblewhite goes looking for a definition of globalisation.
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*  Indonesia: Where to the Workers After Gus Dur?
At the end of a turbulent week, Jasper Goss looks at the impact of the overthrow of Wahid on Indonesian workers.
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*  Review: Mixing Pop and Politics
'The Bank' is a new Australian film that takes a contemporary political issue and transforms it into a piece of compelling popular culture.
*
*  Satire: Milosevic's Defence: "I Was Just Issuing Orders"
Disgraced former Serbian President Slobodan Milosevic has brushed off against charges for war crimes against humanity and mass genocide.
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News
»  Community Banks Are No Collectivists
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»  Labor Vows to Widen Royal Commission
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»  WorkCover Finally Fesses Up � Premiums the Problem
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»  Unions Launch 56 Hour Watch
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»  Call Centre Campaign Bares First Fruit
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»  Justice at Last for One.Tel Workers
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»  Entitlements Push Gathers Momentum
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»  Employer Dirty on Leave Win
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»  Rights Put In Too Hard Basket
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»  AMA Move on Doctors� Hours Welcome
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»  Aussie Post Workers Rally
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»  Strike by Airport Guards Lawful
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»  Workers Rejects Brough Deal
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»  Unions Will March at CHOGM
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»  Average Response to Robberies
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»  Coca-Cola Sued for Using Paramilitary Force
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»  Activists Notebook
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Columns
»  The Soapbox
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»  The Locker Room
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»  Trades Hall
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»  Tool Shed
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Letters to the editor
»  Botsman Bites Back
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»  How to Bash the Bank
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»  Dreams Do Come True
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»  Howard's Job Creation Policy
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