UK - AFFORDABLE CREDIT BY CREDIT UNIONS

AFFORDABLE CREDIT MADE EASIER IN THE UK

Economic Secretary to the Treasury, Kitty Ussher, has confirmed Government plans to make it easier for families to access the affordable credit options offered by credit unions by removing the red tape restricting the growth of the sector.

Credit unions are mutual organisations run by and for the benefit of their members. Members generally benefit through the provision of savings and loans at improved rates although credit unions are increasingly offering other financial services such as Child Trust Fund accounts.

In a speech at the launch of a new All Party Parliamentary Group on Credit Unions Ussher will state that the Government proposes introducing a Legislative Reform Order to enable cooperatives and credit unions to grow in economic terms, and to help increase their efficiency and ability to compete.

For credit unions proposed measures will include: liberalising membership criteria and radically changing the "common bond", so that credit unions can provide their services to a wider range of people; making it possible for groups, rather than just individuals, to become members; allowing credit unions to pay interest on members' deposits; removing the statutory limit on non-qualifying members and allowing credit unions to charge the market rate for services such as chequebooks and money transfers.

For Cooperatives proposals include: Giving societies the flexibility to choose their own accounting year-ends;

abolishing the requirement to have interim accounts audited;

lowering the minimum age for being an officer of a society to 16;

bringing the fee for a copy of the society's rules up to date and making it easier for members to dissolve a society, subject to safeguards.

A cooperative is defined as an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise (International Cooperative Alliance definition).

The Treasury will consult soon on the proposed Legislative Reform Order, with a view to introduction in 2009. Work will continue on preparing for primary legislation, so that further reforms can be introduced when an opportunity arises. 30 June 2008