Q&As

What are some of the key elements in relation to the regulation of credit unions?

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Produced in partnership with Scott Ralston
Published on LexisPSL on 24/01/2013

The following Financial Services Q&A produced in partnership with Scott Ralston provides comprehensive and up to date legal information covering:

  • What are some of the key elements in relation to the regulation of credit unions?
  • What is a credit union?
  • How many credit union members are there in the UK?
  • How are credit unions regulated?
  • What are some of the biggest dilemmas facing credit unions?
  • What are some of the biggest developments affecting the sector?
  • What are the main provisions of the Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2011
  • What is the DWP ‘Credit Union Expansion Project’?
  • What was the impact of the Change of regulatory regime

What are some of the key elements in relation to the regulation of credit unions?

What is a credit union?

A credit union is a type of financial services institution owned and controlled by its members and operated for their own benefit. The objects of credit unions, as defined by the Credit Unions Act 1979 (CUA 1979), are:

  1. the promotion of thrift among members by the accumulation of savings

  2. the creation of sources of credit for the benefit of members at a fair and reasonable rate of interest

  3. the use and control of members' savings for their mutual benefit

  4. the training and education of members in the wise use of money and in the management of their financial affairs

Historically, a credit union was based on a 'common bond' shared by its members, such as a geographical area, a profession, or an affiliation with a particular organisation. Recent initiatives have permitted these common bonds to be combined to some extent. Credit unions are not-for-profit institutions and the interest rate they can charge is statutorily capped. The government is empowered to alter the prevailing rate by secondary legislation: CUA 1979, s 11. Credit unions provide more affordable and accessible financial services than traditional banking institutions.

How many credit union members are there in the UK?

By international standards, credit union membership in the UK is fairly low. Relatively speaking,

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