LONDON (1/12/12)--A recent reform package that provides Britain's credit unions with increased powers to compete more effectively with banks has been hailed as a "major breakthrough" by the Association of British Credit Unions (ABCUL).
The reforms allow credit unions to pay interest on deposits instead of a dividend for the first time. The reforms also allow credit unions to grow by accepting new types of membership, such as limited companies (WalesOnline.co.uk Jan. 11).
The changes will make it easier for credit unions to expand, consolidate and merge because they will no longer need to prove that all eligible members have something in common, the publication said.
ABCUL said the reforms would allow credit unions to provide a more effective alternative to banks, high-cost lenders and loan sharks.
The changes are a "major breakthrough" for Britain's communities, Mark Lyonette, CEO of ABCUL, told the publication, adding that the new rules will allow credit unions to more effectively compete with banks and other lenders to provide affordable services and reach many more people--benefitting communities.
Compared to the U.S. and Canada, Britain's credit union sector is relatively small--with 400 credit unions. ABCUL expects membership will surpass one million members this year.