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“Finish the job!” ...time for the Treasury to pick up the dropped baton for credit unions

Jeremy Palmer, BSA Head of Financial Policy urges the Treasury to pick up and complete the task of widening credit union powers that has been held up for five years since the original policy decisions were made.

Next month, it will be five years since the Treasury completed an excellent review to mark 50 years of British credit unions, promising legislation when opportunity permitted.

We are still waiting... and credit unions are now 55! Will they have to retire before anything gets done?

In June 2014, the Treasury launched an impressive and wide-ranging Call for Evidence under the title “British Credit Unions at 50”. In the foreword, the then Economic Secretary to the Treasury said:

“In launching this call for evidence I want to issue a dual challenge. First, to credit unions themselves, to set out for us their vision of where they want to be as a sector in the coming years, and to point out where further government action is needed to support that. You know best what your members need and want from you, and government stands ready to do what it takes to allow you to deliver that.”

The Call for Evidence achieved very good engagement, with 78 responses from across the credit union sector, from local authorities, third sector stakeholders, and others (including from five large credit unions who are now BSA members). Almost a textbook example of good policy making: asking the right questions, without too many preconceptions, and showing openness rather being imprisoned by the past.

A key feature both of the Call, and many of the responses, was to identify the need to widen credit unions’ powers as set out in legislation.

The Government published its response on, we believe, 1 December 2014. The consultation feedback  had been thoroughly analysed and intelligently considered, and well-founded and forward-looking conclusions were reached.

On the subject of credit unions’ powers, the following momentous statements were made:

“Many responses from trade associations, large credit unions and small credit unions showed support for the introduction of a general purpose object. They felt that this would give credit unions the freedom to provide any financial service that benefitted members...

...The government recognises the credit union sector’s calls for various revisions of the current legislation. In general, these legislative changes require primary legislation and will therefore need to be considered under the next parliament.

However, the government is today committing to consider potential changes to the legislation on credit unions in the next parliament, subject to the availability of an appropriate legislative vehicle. The call for evidence responses produce some useful areas of focus for this, including: (1) Objects”

That was five years ago, and we are still waiting for this unfinished business to be completed.

We have lost five years of opportunity to improve customer choice and access to affordable credit. Worse, every now and again, it feels as though the excellent work of 2014 will simply be ignored or abandoned by Government, and the wheel has to be totally re-invented.

Following the forthcoming election, we will be on to the third Parliament since these commitments were made.

So, in anticipation, our message on behalf of our six credit union members is:

To the Treasury: Full marks for an excellent piece of policy-making in 2014. Don’t spoil it by continually going back to the beginning as though it never happened.

To the incoming Government: Pick up the dropped baton, and finish the job!  Our members are keen to help. How about, as a first step, getting all the CU trade bodies together with Treasury after the election, and take it from there?

Posted by Jeremy Palmer on 29 November 2019