In 2014, the Government undertook a call for evidence to understand the appropriate steps that could be taken to support the credit union sector. Subsequently, the maximum interest a credit union can charge on loans was raised from 2% to 3% per month, and the upper limit on the geographical common bond was raised from 2 to 3 million people.
The Government continues to be open to considering the case for further reform. ABCUL, the sector’s largest trade body, is currently carrying out a sector-wide consultation which is due to conclude later this year. HMT will consider its conclusions in the development of future credit union policy.
At Autumn Budget 2018, the Government announced a package of measures to support credit unions, and other social and community lenders, including:
- A £2 million affordable credit challenge fund, harnessing the UK’s FinTech sector to address challenges faced by social and community lenders, including credit unions.
- A change in the regulatory boundary of credit broking to make it easier for registered social landlords such as housing associations to refer their tenants to social and community lenders.
- A prize-linked savings pilot scheme, to encourage the growth of the credit union sector and encourage consumers to build up their personal savings. This pilot launched on October 17th, International Credit Union Day, in 13 credit unions around the country, with 2 more credit unions due to join the pilot.
- A feasibility study to design a pilot for a UK No-Interest Loans Scheme.
The PRA have also proposed a simplified, proportional capital requirement regime for credit unions in their recently published consultation.