More people will benefit from affordable loans and savings as the
government changes the rules so more people can join credit
unions, helping households with the cost of living.
Delivering on its manifesto pledge to grow the mutuals sector,
the government is today (18 March) setting out reforms to the
rules on who can join credit unions in Great Britain.
By making it easier for credit unions to serve more people in
their communities, the changes will support families, workers,
students and retirees to access fairer financial products and
build financial resilience.
Credit unions offer affordable, community based financial
services and play an important role in promoting financial
inclusion. Enabling credit unions to expand and broaden their
membership will help ensure that more people can access fair,
lower-cost alternatives to high-cost credit. This will strengthen
the provision of responsible financial services and support
households with the cost of living.
Economic Secretary to the Treasury said:
These reforms will help more people get access to affordable
credit and a safe place to save, so families have a real
alternative to high-cost credit.
We're delivering on our manifesto pledge to grow the mutual
sector by backing credit unions to expand and serve more
communities. It's another step in making financial services more
accessible and supporting people to build financial resilience.
The reforms will include:
- Bigger credit unions, serving more people: government
will raise the cap on locality-based credit unions
from three million to 10 million potential members,
making it easier for them to grow and merge.
- Students included: Students will be able to join
locality-based credit unions, alongside people who live or work
in the area.
- Modern rules for modern families and working
lives: Credit unions will be able to serve more relatives
and household members, and members will be able to stay with (or
join) their credit union after retirement as full members.
These reforms follow the Call for Evidence on credit unions'
common bond rules launched after the Chancellor's first Mansion
House speech.
This also builds on the government's wider work to improve
financial inclusion and resilience across the UK. As part of the
Financial Inclusion Strategy, the government is also working
closely with the financial services sector and consumer groups to
bring forward interventions to make it easier for people to
access a bank account, support people to build savings and
improve financial education.
Lakshman Chandrasekera, Chief Executive Officer, London
Mutual Credit Union said:
I warmly welcome today's announcement. Raising the common bond
cap to 10 million gives credit unions the freedom to grow and
keep wealth within the communities we serve. In London, we see
first-hand the demand for fair, affordable finance. This reform
means many more people across the UK will be able to access it –
building savings, reducing reliance on high-cost credit, and
developing real financial resilience. This is a transformative
moment for the sector.
Frances McCann, CEO, Scotwest Credit Union said:
Today's announcement is excellent news for credit unions and for
the communities we serve. Raising the locality cap to ten million
potential members and modernising the rules around family and
retirement membership are exactly the kind of practical,
meaningful reforms the sector has been asking for.
At Scotwest we see every day the difference a credit union can
make to households that need an affordable alternative to
high-cost credit. These changes will allow more credit unions to
reach more of those people.
Matt Bland, Chief Executive of ABCUL said:
This announcement marks an important milestone in the
government's recognition of the vital role credit unions play in
strengthening financial resilience and improving financial
inclusion across Great Britain. Reforms to the common bond will
enable credit unions to expand their reach, serve more
communities and work together more effectively to deliver
sustainable growth.
As the government's Financial Inclusion Strategy moves into
delivery, it is encouraging to see credit unions recognised as a
central part of improving access to fair and affordable financial
services.
Further information
- Credit unions must have a ‘common bond' – a defined
connection between members, such as living or working in a
particular area, or sharing a workplace or profession.
- You can find the Call for Evidence summary here.
