Social housing tenants set to benefit from new credit union powers

Published by Jon Land for 24dash.com in Bill Payments and also in Housing

Social housing tenants and employees in England, Scotland and Wales will start to benefit from new credit union powers from next week.

The new powers, which come into effect on January 8, are the result of legal changes that will give credit unions more flexibility to choose who can access their services.

This means that new partnerships will allow all of a housing organisation’s tenants and employees to join one credit union, no matter where they live or work. For the first time, housing and other community organisations will be able to join a credit union and use the services it provides, and credit unions will now be able to pay interest on deposits, instead of a dividend, helping to mobilise community savings.

Although many housing providers already work with credit unions in their communities, up to now they have been hampered by outdated restrictions which meant all of a credit union’s members had to have something in common – such as living in the same geographical area or working for the same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 – and only individuals were able to become members, not companies, community groups or social enterprises.

Credit unions no longer have to prove that all the eligible members have something in common. This means a credit union can now provide services to all the employees and tenants of a housing provider, even if many of these people live outside the area currently served by the credit union.

The new rules mean that local community organisations such as tenants’ associations can join a credit union and use the financial services it provides. A housing organisation which wished, for example, to assist its local credit union to increase the supply of affordable credit in a community, would now be able to do so.

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.

“These changes are a major breakthrough in the delivery of credit union services to communities around Britain,” said Mark Lyonette, Chief Executive of ABCUL – the Association of British Credit Unions.

“The new rules mean credit unions can now compete more effectively with banks and other lenders to provide fair and affordable financial services to housing organisations, their tenants and employees. The changes will help credit unions build stronger relationships with housing providers and encourage housing tenants to develop a savings habit – which can only be good for communities.”

As financial co-operatives, owned and controlled by their members, credit unions have no outside shareholders to pay and any profit they make stays in the community and is used to develop the credit union and provide a return to savers.

Credit unions offer a range of services which can benefit housing providers and their tenants. This includes savings accounts, which members can pay into directly by payroll deduction or through benefit direct accounts as well as through retail payment networks such as PayPoint and at local collection points such as Post Offices, the Credit Union Current Account, the Credit Union Prepaid Card and an affordable source of credit.

Housing providers that would like to make contact with their local credit union can check which ones operate in their area by visiting www.findyourcreditunion.co.uk or calling ABCUL on 0161 832 3694.