The Government has announced reforms to credit union membership rules that will allow members who relocate outside their credit union's area to refer relatives or household members for membership. The change removes a requirement that members must live in the same area as the credit union to access its services, according to HM Treasury. Currently, over 50,000 people across Great Britain cannot refer relatives or household members but will be able to do so under the new rules, based on Bank of England data.
Credit unions provide community-based financial services including savings accounts and small loans at lower interest rates than those typically available at high street banks. Membership has historically been limited by a 'common bond' requirement, meaning people needed to share something with existing members such as living in the same area or working for the same employer. The latest reform is intended to strengthen household financial resilience and promote financial inclusion by making these services accessible to tens of thousands more families, workers, students and retirees.
This announcement builds on earlier Government action to expand the sector. HM Treasury previously raised the membership cap on local credit unions from three million to ten million members. The industry has welcomed the additional reform, which was announced at the second reading of the Financial Services and Markets Bill in parliament. Sarah Harrison, Chief Executive of the Building Societies Association, said the change 'removes an unnecessary barrier to credit union membership' and 'reflects the way families live today'.
Laura Willerton, Head of Commercial Deposits at The Co-operative Bank, called the reform 'great news for credit unions and the people and communities they serve'. She added that the changes would help the sector grow its reach and enable more families to benefit from fair, affordable financial services. HM Treasury described credit unions as 'at the heart of communities up and down the country', saying the reforms would help reach even more people and play a greater role in strengthening financial inclusion across Great Britain.
For UK savers and borrowers, the reforms could provide access to lower-cost savings accounts and small loans to tens of thousands more people who previously could not join a credit union due to geographic restrictions.