LONDON, UK – Seven proposals proposed by Her Majesty’s Treasury would not only amend the Credit Unions Act of 1979 but would allow United Kingdom credit unions a chance to grow. Until recently credit unions have been limited in membership, services, deposits and loans to choking bounderies. This was changed by the Labour government, which began to look at credit unions as a way to bring financial services to the underserved or unserved. Economic Secretary Ruth Kelly said: “These proposals are aimed at reducing some of the restriction on credit unions’ operational powers, and we are seeking comments on all aspects of the draft proposals, to inform the policymaking process going forward. The credit union movement is known for its diversity, so I hope that a wide range of consultees will respond, to enable Government to take account of all the different perspectives and needs.” The proposals would let credit unions borrow money from external sources, other than authorized banks and other credit unions for the first time. Credit unions would also be given the right to differentiate between certain accounts by paying dividends at different rates. More importantly, they will be able to pay dividends more than once each year. Up until now products for credit union are basic savings and loans. If the new Credit Union Act is approved, credit unions could provide additional basic services. They would also be allowed to charge fees for the services. The Treasury used a bill paying service as an example. The rules for the common bond would be more flexible. Recently credit unions have been offered wider geographic common bonds, but the new proposals would consider other definitions more flexibly. The term “Credit Union” would be controlled with appropriate regulations. The proposals also suggest changing the minimum coverage requirements for fidelity bonds. Up until now joint accounts have not been allowed. If approved credit unions could offer accounts with two or more names. If activated, the changes would be made into an order under the Regulatory Reform Act 2001. The goal is to bring the new regulations into affect on July 1, 2002 when UK Credit Unions go under the regulatory regime of the Financial Services Administration (FSA). For the past two years the FSA and credit unions working with the Association of British Credit Unions, Ltd. (ABCUL) have been preparing for the transition. Shaun Spiers, ABCUL CEO said today: “This change is needed to attract the savings into the credit union movement that will enable other members’ credit needs to be met. It will enable a credit union, for example to give higher returns on long term savings than on accounts used for paying utility bills.” ABCUL will shortly issue an Early Draft Position Paper on this consultation and has invited credit unions to make their comments before January 18 2002. – [email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?

 

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2022 ALM Global, LLC. All Rights Reserved.