Credit union reform a step closer
17th March 2010
A historic change in legislation, which will see credit unions freed up to increase membership and fulfil their potential as providers of financial services, has come a step closer.
ABCUL – the Association of British Credit Unions – has welcomed the laying of a Legislative Reform Order (LRO) in Parliament, which means that long-awaited legal reforms for credit unions could be in place within months.
ABCUL Chief Executive Mark Lyonette says: “It’s great that we finally have a timeframe for the LRO to get through Parliament. This has been eagerly anticipated by the credit union sector for a long time and it’s good to know that we’re nearly there.
“All the political parties are supportive of the reforms proposed and this means we are likely to see the changes come into effect by 1 August this year – which is really exciting for credit unions.”
ABCUL has also welcomed the passing by Parliament of the Co-operative and Community Benefit Society and Credit Union Bill, which will help modernise legislation covering all co-operative businesses.
Mark Lyonette adds: “Modernised legislation for credit unions, and other organisations operating the mutual model, will mean fewer obstacles to carrying out our business, allowing us to focus on our key objective of serving our members.”
Both the LRO and the Bill have received strong cross party support in the House of Commons and the House of Lords.
Economic Secretary to the Treasury, Ian Pearson MP, speaking during an earlier debate on the Bill said: “We must do all we can to ensure that credit unions thrive and play an even more important role in the economy. I agree with my right hon. Friend’s comment that credit unions are the ‘decent alternative’.”
In a House of Lords debate on the Bill, Financial Services Secretary Lord Myners said: “The Government applaud the role that credit unions play in encouraging a savings ethos among their members, as well as providing them with necessary capital when needed.”
Speaking during the third reading of the Bill, Mark Hoban MP, Shadow Financial Secretary to the Treasury, said: “All of us across the House recognise the importance of credit unions in providing an alternative to the banking system.
“A number of moves have been made in recent years to modernise the legislative framework for credit unions, to ensure that they are capable of being sustainable and viable, and can provide a proper alternative to banks.
“I meet regularly with the Association of British Credit Unions Limited to talk about such issues and I know how keen credit unions are to see this Bill put in place and for the legislative framework to be modernised.”
Liberal Democrat MP Norman Lamb said: “I have also seen credit unions developing in my area, offering people who are often on low incomes a vital alternative facility to that offered by doorstep lenders who charge high interest rates. We need to do everything that we can to encourage and promote credit unions.”
Changes due when the LRO comes into forces will enable credit unions to provide services to community groups, social enterprises and companies. They will also be able to bring new groups into membership and offer a fixed rated on interest (instead of a dividend) on members’ savings.
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Notes to Editor:
ABCUL is the main trade association for credit unions in England, Scotland and Wales. At the end of June 2009, ABCUL's 325 credit unions were managing nearly £450 million of members' savings on behalf of over 550,000 people, and had over £375 million out on loan.
ABCUL is the country’s largest development, information and training network for new credit unions. It is a democratic, not-for-profit organisation and is improving day-to-day operations, legislation and regulation for all credit unions.
Credit unions are licensed deposit takers, authorised and regulated by the Financial Services Authority. They are covered by the Financial Services Compensation Scheme, so the first £50,000 of a member’s savings are completely safe.
For more information contact Sean Bish at Ethos public relations:
Tel: 0161 830 7640
Mobile: 07970 875907
E-mail: sean.bish@ethos-pr.com
Website: www.ethos-pr.com
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