10 November 2011
Legislative Reform (Industrial and Provident Societies and Credit Unions) Order 2011 has been enacted by the government
The Legislative Reform Order, which makes changes to the Credit Unions Act 1979, has been approved by Parliament and new rules will come into effect 8th January 2012.
The changes will free up credit unions to reach many more members, including community groups and businesses.
The Order makes a number of changes, including allowing credit unions to provide services to community groups, attract investment from local businesses and extend services to new groups, including housing association tenants and employees. Credit unions will also be able to pay interest on savings, instead of a dividend, so people will more easily be able to compare rates.
The cdfa welcomes such changes, which will increases the scope and reach of access to finance initiatives. Many community development finance institutions are constituted as Industrial Provident Societies, often more commonly known as mutuals, and these changes will help them in addressing the growing problem of financial exclusion. Financial exclusion is a widespread problem, so with Credit Unions providing services to their members and CDFIs delivering holistic financial services to the wider public turned down by mainstream banks, alternative forms of business and personal financing can really flourish.