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FSA/PN/077/2008
23 July 2008
The Financial Services Authority (FSA) today responded to legislative proposals by the Government designed to remove restrictions on the way credit unions in Great Britain will be able to operate in future.
Paul Sharma, Director Wholesale and Prudential Policy at the FSA, said:
“We welcome today’s announcement and the encouragement for the credit union movement to grow as an economic force and to provide wider services to their members, some of whom are financially vulnerable and have limited access to other financial services.
“The experience of recent years where a number of credit unions have failed also indicates the need to strengthen some aspects of our regulatory policy for the sector. This will help credit unions become financially sounder and better managed and thereby better placed to take maximum advantage of the possibilities the legislative changes open up for them.
“We plan to publish a Consultation Paper in the autumn which will set out the shape of the stronger regime focussed on improving capital and liquidity, and encouraging better compliance by key people with significant influence over credit unions.”
Notes for Editors
23 July 2008
The Financial Services Authority (FSA) today responded to legislative proposals by the Government designed to remove restrictions on the way credit unions in Great Britain will be able to operate in future.
Paul Sharma, Director Wholesale and Prudential Policy at the FSA, said:
“We welcome today’s announcement and the encouragement for the credit union movement to grow as an economic force and to provide wider services to their members, some of whom are financially vulnerable and have limited access to other financial services.
“The experience of recent years where a number of credit unions have failed also indicates the need to strengthen some aspects of our regulatory policy for the sector. This will help credit unions become financially sounder and better managed and thereby better placed to take maximum advantage of the possibilities the legislative changes open up for them.
“We plan to publish a Consultation Paper in the autumn which will set out the shape of the stronger regime focussed on improving capital and liquidity, and encouraging better compliance by key people with significant influence over credit unions.”
Notes for Editors
- HM Treasury’s Consultation Document and draft Legislative Reform Order for credit unions in Great Britain was published today. Changes planned 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.
- FSA regulation of credit unions began on 1 July 2002. There are around 535 credit unions in Great Britain with approximately 600,000 members and assets totalling some £537 million. (Credit unions in Northern Ireland are locally regulated and do not come under FSA.)
- The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
- The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.
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