FINANCE NEWS: Regulatory change sees credit unions prepare for growth

The credit union sector came of age this week when the Financial Services Authority took over as regulator.

The move means greater protection and chances of compensation for depositors, larger loans and a more varied choice of savings services. It is also expected to signal an increase in geographical spread and take up of UK credit unions over the next five years.

"An improved, proportionate regulatory regime means we can concentrate on increasing access to the valuable services that credit unions provide,

said Shaun Spiers, chief executive of credit union trade association ABCUL.

"This move shows that these are professional financial service providers and not 'a poor man's bank',

said Sarah McGeehan, head of community development finance at the New Economics Foundation. McGeehan now predicts an era of expansion under the regulatory regime.

Credit unions used to be regulated separately from banks and building societies, which has limited take up of their services.

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