Question to the HM Treasury:

To ask Her Majesty's Government what plans they have to review the regulations concerning credit unions.

In 2014, the Government undertook a call for evidence to understand the appropriate steps that could be taken to support the credit union sector. Subsequently, the maximum interest a credit union can charge on loans was raised from 2% to 3% per month, and the upper limit on the geographical common bond was raised from 2 to 3 million people.

The Government continues to be open to considering the case for further reform. ABCUL, the sector’s largest trade body, is currently carrying out a sector-wide consultation which is due to conclude later this year. HMT will consider its conclusions in the development of future credit union policy.

At Autumn Budget 2018, the Government announced a package of measures to support credit unions, and other social and community lenders, including:

• A £2 million affordable credit challenge fund, harnessing the UK’s FinTech sector to address challenges faced by social and community lenders, including credit unions.
• A change in the regulatory boundary of credit broking to make it easier for registered social landlords such as housing associations to refer their tenants to social and community lenders.
• A prize-linked savings pilot scheme, to encourage the growth of the credit union sector and encourage consumers to build up their personal savings. This pilot launched on October 17^th, International Credit Union Day, in 13 credit unions around the country, with 2 more credit unions due to join the pilot.
• A feasibility study to design a pilot for a UK No-Interest Loans Scheme.

The PRA have also proposed a simplified, proportional capital requirement regime for credit unions in their recently published consultation.