The Credit Unions Act is changing

Earlier in the summer, the Financial Services and Markets Act became law. It covered a wide range of topics, including access to cash and APP fraud. But excitingly for credit unions and their members, it also amended the Credit Unions Act. And it’s these changes that will allow credit unions to continue serving their members by allowing them to offer new products to complement existing products – something the National Credit Union Forum and the BSA have been calling for. The Act also gives new powers to HMT to add additional ‘objects’ in the future.

More benefits for credit union members

The most important change is the option for credit unions to expand their objects, giving them the opportunity to choose to provide important, additional services to their members. 

Many credit unions have wanted to offer additional basic personal and household insurances, such as home and pet insurance, and car finance through hire purchase or personal contract plans. The changes provide much needed clarity on what they are permitted to do.

While there are plenty of commercial providers offering such products, take-up is often particularly low among financially excluded individuals and communities. Credit unions are trusted partners in these communities, so it makes sense for them to be able to offer these products to their members. The credit union will just be the mediator in the sale, with the cover underwritten by a third party. 

The benefits of this change are significant for people who may struggle to access these products from mainstream or high street providers. It also enables credit unions to provide a more holistic service to their members.

Those credit unions who wish to adopt the required changes to their objects, will need to submit a ‘Variation of Permission’ application or VoP to the Regulator.

Caroline Domanski, Chief Executive of No1 Copperpot Credit Union said:

"For many years we have campaigned to widen the products and services that credit unions can offer their members. The welcome changes mean that credit unions can not only help more people but will ensure their longer-term survival, through the creation of additional income streams."

For further information visit: https://www.fca.org.uk/firms/credit-unions/legislation-changes