Credit unions across Britain have welcomed news that Parliament has approved changes to legislation freeing up credit unions to reach many more members, including community groups and businesses.
A Legislative Reform Order (LRO), which makes changes to the Credit Unions Act 1979, has been approved by Parliament and new rules that enable credit unions to compete more effectively with banks and other lenders will be in place by January 2012.
The Order makes a number of changes, including allowing credit unions to provide services to community groups, attract investment from local businesses and extend services to new groups, including housing association tenants and employees. Credit unions will also be able to pay interest on savings, instead of a dividend, so people will more easily be able to compare rates. Personal loans are also offered by credit unions.
A more level playing field
Mark Lyonette, chief executive of the Association of British Credit Unions (ABCUL), said: ‘Credit unions in Britain are delighted that legislative reforms have been agreed by Parliament which free up the sector to compete on a more level playing field. ABCUL has campaigned long and hard for these changes so we’re happy that credit unions will be able to use the new powers from the New Year.’
Chair of the All Party Parliamentary Group on Credit Unions, Damian Hinds MP said: ‘I’m very pleased that the LRO has now been made. It opens up so many new possibilities for the sector to evolve, innovate and grow. The regulatory changes will help credit unions work more effectively with partners including housing providers and employers, and encourage more people to develop a savings habit.’
Which? supports credit unions
Which? has long supported the credit union movement and welcomes the new legislation. Britain’s 450 credit unions let people in a local community, workplace or other organisation save and borrow money. Owned and controlled by their members, credit unions have no outside shareholders to pay.
They are run by volunteers elected by the membership and any profit they make is used to develop the credit union and provide a return to savers. You can access savings accounts via credit unions, which pay decent if not market-leading rates, and are covered up to £85,000 by the Financial Services Compensation Scheme.
Credit unions also lend to people who might otherwise be tempted to consider payday or doorstep loans. If you’re looking for a mainstream personal loan, check out our new, improved Best Rate personal loan tables. Find the best deals for borrowing £5,000 over 3 years or £10,000 over 5 years.