Check against delivery

Thank you, Kerry for that introduction, and for the invitation to be here. And it really is an absolute pleasure to be at the launch of this new All Party Parliamentary Group on Credit Unions.

I’m sure many of you know how passionate I am about Credit Unions, and about the huge amount of good that they’re doing across the country.

Benefits of Credit Unions

Because they work for their members, and not for shareholders, Credit Unions can create a sense of trust and loyalty that companies can’t – and that means that they can reach people and communities that no-one else would.

That gives them a particularly important role to play in tackling financial exclusion.

As many of you will have seen in your constituencies, being shut out of the financial system creates extra costs, often for the very people who can least afford them. And it stops people from participating fully in our economy, and in our society.

If people can’t get affordable credit, they can also be driven to use more expensive options, like doorstep lenders – or even to risk intimidation and violence from illegal loan sharks. And that can lead to a spiral of debt.

I believe that everyone should be able to get affordable credit, especially at a time when I know families are facing a tough time – and Credit Unions can help to make that happen.

And as well as offering small, affordable loans – and it often is only a small amount that’s needed – they also provide a trusted place for people to save in their local community.

Supporting Credit Unions

I’m absolutely committed to supporting Credit Unions in doing all of this, which is why I’m so pleased that this new Group has been set up.

And as a Government, we have been working to give them a more level playing field – with greater borrowing powers; more flexibility in their membership; the ability to offer cash ISAs and Child Trust Funds; and a higher interest rate ceiling.

We’re also using £38 million over the next three years to double the capacity of the third sector to lend to the financially excluded, which will of course include Credit Unions.

Legislation

And as you’ll know, we’ve been consulting over the last eighteen months or so about updating the legislation that deals with Credit Unions.

We want to bring that legislation into the twenty-first century, and to free the sector from some of the restrictions that have been holding it back for decades from making even more of a contribution to our economy, and to our society.

And as I announced over the weekend, we will be making many of the changes that are needed through a Legislative Reform Order.

For Credit Unions, that will include:

• liberalising membership criteria, and radically changing the ‘common bond’, so that they can provide their services to a wider range of people;
• making it possible for groups, rather than just individuals, to become members; and
• allowing Credit Unions to pay interest on members’ deposits, provided certain conditions are met.

It will also mean:

• allowing them to charge market rates for providing ancillary services to their members;
• lowering the minimum age for being an Officer of a Credit Union to 16, to align it with the minimum for Company Directors;
• allowing Credit Unions to publish unaudited interim accounts; and
• removing the statutory limit on non-qualifying members, but allowing Credit Unions to set their own limits if they wish.

That’s quite a list.

And in addition to the LRO, we also plan to sort out the bizarre position of electronic communications between societies, members and the statutory authorities being restricted by legislation, using an Order under the Electronic Communications Act 2000.

And we intend to use further legislation to align the law governing Credit Unions with that for companies – for example applying the Company Directors Disqualification Act to Credit Unions, to ensure that unsuitable people can’t act as officers; and placing the same restrictions on transactions with directors and connected persons as applies to companies.

Those changes will remove some of the outdated and unnecessary restrictions that are limiting Credit Unions from competing on a level playing field with their competitors; and that are preventing them from growing and developing as we’d all like them to.

And by doing that, we can free the sector to achieve even more than it already is; and we can help to make common ownership a genuine alternative to the company form, which has been one of my main objectives over the past year.

Conclusion

That is, I think, what we all want to achieve – which is why you’re all here today to support this new All Party Group.

I hope that it can play a role in bringing Parliamentarians and the sector even closer together, and in continuing to support Credit Unions in the remarkable work that they’re doing.

I want to particularly thank Mark, and everyone at ABCUL, the Association of British Credit Unions Ltd., for providing the secretariat for the Group.

And thank you for all the other work that you do promote and to support the sector, too – including being part of the Working Group that we’ve set up to help us with our work on the Credit Unions legislation.

I’d also like to congratulate Kerry, for taking on the Chairmanship of the Group – and to thank you for the invitation to speak at the launch today.

As I said at the start, it is a real pleasure to see this Group getting started, and to see so many people here today to support it.

I hope you’ll continue to be involved with it in the future, and I hope that can help the Credit Union sector to continue to grow, to develop, and to thrive in the years ahead.

Thank you for listening.

Ends