Britain’s co-operatives are set to benefit from credit union legislation that allow under-16s to become members and provide an opportunity to raise more capital.
New powers for co-operatives and community benefit societies across England, Wales and Scotland in changes to the Credit Unions Act 1979 will abolish the limit on the value of non-withdrawable shares that are held in a society. In an article by legal writer Ian Snaith, which analyses the important points of the legislation, he says this particular change “will allow societies to raise funds more easily by using shares”.
Co-operatives can also embrace younger people into membership with the abolition of the previous minimum age limit of 16 — although some society rules may have to be individually amended if they state a minimum age of 18. Those aged between 16-18 can also become a director of a co-operative, community benefit society or credit union.
In his analysis of the legislation, Ian Snaith adds: “Now is the time for societies to review their rule books and decide whether they can take advantage of these new opportunities. Credit unions will be looking at the new opportunities to expand and improve the service they offer their members and communities, with the possibility of corporate members and business lending as well as more scope for offering extra services and new products.”
Credit unions will have more flexibility to choose who can access their services. For the first time, co-operatives will be able to join a credit union and benefit from its services. New partnerships will also allow all of a co-operative’s staff and members to join one credit union, no matter where they live or work.
Up until now, credit unions have been hampered by outdated restrictions which meant only individuals were able to become members, not co-operatives themselves, and all of a credit union’s members had to have something in common – such as living in the same geographical area or working for the same employer.
Up to 10% of the members of a credit union will be allowed to be corporate members. As well as accepting ordinary shares, credit unions will also be able to seek investment by offering deferred shares, which will be transferable but not withdrawable, and only repayable in limited circumstances. Deferred shares will count towards the capital of a credit union.
Mark Lyonette, Chief Executive of ABCUL, the Association of British Credit Unions, said: “These changes are a major breakthrough in the delivery of credit union services to co-operatives and other businesses around Britain.
“The new rules mean that, for the first time, credit unions will be able to offer services directly to co-operative businesses, allowing credit unions to compete more effectively with banks and other lenders to provide fair and affordable financial services. The changes will also help credit unions build stronger relationships with the staff and members of co-operatives, helping them to develop a savings habit – which can only be good for communities.”
• To find your local credit union, visit www.findyourcreditunion.co.uk or call ABCUL on 0161 832 3694.