Credit unions likely to get new powers

Legislative order from Government would allow them to pay interest on accounts and pay dividends to shareholders

The Government has published a draft of a legislative reform order that will grant new powers to credit unions.

The new legislation, which is expected to be voted into law after Parliament's summer recess, will allow credit unions to pay interest on accounts and pay any dividends they choose to shareholders.

It will also allow both incorporated and unincorporated bodies to become full members of unions on the same terms as individuals, meaning that credit unions will be able to provide banking services to charities and community organisations.

Credit unions will also be able to accept much larger numbers of members from a wider geographical area.

The publication of the draft means the Financial Services Authority will be able to launch a consultation on what changes are needed in its regulation of credit unions.

"It's good news this has now been published," said Abbie Shelton, policy and communications manager for Abcul, the umbrella organisation for credit unions. "We're hopeful all the necessary legislation and regulation will be in place by April next year," she said.

"We've already carried out research among our members, and they're very supportive of the new powers they will receive."

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