The government remains committed to supporting credit unions, which provide vital services to financially under-served communities and contribute to the diversity of the UK’s financial services sector. To improve access to credit unions, government has:
· In April 2018, announced increased funding for a scheme which incentivises credit union membership in areas at risk of being targeted by loan sharks. This will help vulnerable people to borrow and save with a safe and responsible financial provider, and promote credit unions as an alternative source of credit.
· At Autumn Budget 2017, announced that the credit union ‘common bond’ limit, which applies to credit unions whose membership is based around a local area, would be raised from 2 to 3 million. This change came into force in April this year, and will allow the larger credit unions to expand and help the sector to consolidate.
· In 2014, raised the statutory cap on the total interest a credit union can charge on loans from 2 to 3% per month. This has allowed credit unions to expand into new markets, and compete more effectively with other lenders.