Kitty Ussher MP, economic secretary to the Treasury, has told a meeting of the all-party Parliamentary group on credit unions that she intends to provide greater borrowing powers, flexible membership and the ability both to offer more products and to lend at higher interest rates.
Credit unions will also be allowed to liberalise their membership criteria, take groups as members, and pay interest on accounts. The concept of a 'common bond', which must be shared by all members of the union, will also be relaxed.
Credit union law will be brought in line with companies' law, as will unions' ability to use electronic transfers.
The powers will be granted using a series of orders under existing legislation.
Ussher said: "These changes will remove some of the outdated and unnecessary restrictions that are limiting credit unions from competing on a level playing field with their competitors and that are preventing them from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."
Mark Lynotte, chief executive of ABCUL, the umbrella organisation for credit unions, said: "We're delighted that Kitty Ussher has announced that legislation will be brought forward to modernise the way credit unions can operate.
"In particular, we will be welcoming a relaxation of the common bond. This will mean that credit unions can offer their services to more people."