Financial Institutions

Treasury written question – answered on 3rd September 2019.

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Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party

To ask the Chancellor of the Exchequer, whether the Government plans to bring forward a review of legislation for Co-op societies, Credit Unions and Community Benefit Societies as proposed by the Financial Conduct Authority in its 22 July 2019 report Alternatives to high-cost credit.

Photo of John Glen John Glen Minister of State (Treasury) (City), The Economic Secretary to the Treasury

In 2014, the Government undertook a call for evidence to understand the appropriate steps that could be taken to support the credit union sector. Subsequently, the maximum interest a credit union can charge on loans was raised from 2% to 3% per month, and the upper limit on the geographical common bond was raised from 2 to 3 million people.

The Government continues to be open to considering the case for further reform. ABCUL, the sector’s largest trade body, is currently carrying out a sector-wide consultation which is due to conclude later this year. HMT will consider its conclusions in the development of future credit union policy.

At Autumn Budget 2018, the Government also announced a package of measures to support the availability of affordable credit, including:

o A £2 million affordable credit challenge fund, harnessing the UK’s FinTech sector to address challenges faced by social and community lenders, including credit unions. o A change in the regulatory boundary of credit broking to make it easier for registered social landlords such as housing associations to refer their tenants to social and community lenders. o A prize-linked savings pilot scheme, to encourage the growth of the credit union sector and encourage consumers to build up their personal savings. We hope credit unions will be able to use the deposits gained from their participation in the scheme to increase their overall lending. o A feasibility study to design a pilot for a UK No-Interest Loans Scheme.

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