HM Treasury - Industrial & Provident Societies: growth through co-operation
Summary of response
While we make detailed comments on the various proposed measures below (see attachment), we would like to underline in this summary our strong support for the general thrust of the proposals as laid out. We appreciate the Government's continued commitment to creating a level playing field in terms of the legislative framework under which IPSs and credit unions operate relative to that for companies. It is very welcome that the Co-operative and Community Benefit Societies and Credit Unions Act is to be commenced following its passage through Parliament some years ago.
This package of measures, while unlikely to cause headlines, represent a significant step forward in ensuring that where an IPS finds itself in difficulty, it can be resolved in a manner which is efficient and effective, protects the legitimate interests of both creditors and members and limits undue reputational damage to the sector.
Similarly, we are greatly encouraged by the measures proposed in that they open up opportunities for credit unions or IPSs to continue providing services should one find itself in financial difficulty but where there is the possibility that it might be saved as a going concern. The fact that to date the only option in such circumstances has been winding up of societies demonstrates the gulf that has been allowed to develop between the legislative arrangements for IPSs as opposed to companies.
Finally, we would like to express our strong support for the proposal to extend the powers of resolution under Part 2 of the Banking Act 2009 to credit unions. We hope that these powers will enable failing credit unions to be, in future, resolved in such a way that their members can retain access to a credit unions services. This should allow for a much-improved situation as regards credit union failure and resolution in support of the expansion and rationalisation process which is currently taking place and is supported by the Government's £38 million Credit Union Expansion Project.
The full response is available to download on the right.