The government has today announced the most significant reform to credit union rules in a generation, and it could make a real difference to Londoners looking for a fairer alternative to high-cost borrowing.
The government will raise the cap on how many potential members a locality-based credit union can serve from three million to ten million. Students will be able to join credit unions serving their area, not just people who live or work there. Members will be able to stay with their credit union after retirement, and credit unions will be able to serve more relatives and household members than before.
Our Chief Executive, Lakshman Chandrasekera, welcomed the announcement, saying:
“Raising the common bond cap to 10 million gives credit unions the freedom to grow and keep wealth within the communities we serve. In London, we see first-hand the demand for fair, affordable finance. This reform means many more people across the UK will be able to access it — building savings, reducing reliance on high-cost credit, and developing real financial resilience. This is a transformative moment for the sector.”
London’s credit unions have a bigger role to play. The evidence is already there.
Today’s announcement comes at a moment of real momentum for London’s credit unions. The London Assembly’s Economy, Culture and Skills Committee recently called on the Mayor to expand access to credit unions across the capital, backing arguments we put to them directly in February. Our own Social Impact Report, published earlier this month, showed we saved members over £2.1 million in interest last year — around £41,000 every week — compared to what they would have paid elsewhere. There is a growing recognition, from City Hall to Westminster, that credit unions have a bigger role to play in London’s financial life.
We share that ambition, and we think it should be a broad one. Credit unions are not, and have never been, just for people on low incomes or in financial difficulty. One in five of our borrowers earns over £50,000 a year. Behind our figures are NHS staff consolidating credit card debt, graduates living in their overdrafts, and service personnel trying to get on the housing ladder. The credit union works for all of them.
In that sense, London has some catching up to do. In Ireland, the United States, and Canada, credit unions are a normal part of financial life, trusted by millions of people at every income level. Too often we have had to turn people away who we could not serve under the old rules, and the complexity of those rules has itself been a barrier, making credit unions seem like they are for someone else, not for you. That is something we’ll be working to change.
What comes next
Over the coming months we will be working through how to make the most of these reforms, for existing members, for the Londoners we do not yet reach, and for the communities across the capital where we already have deep roots. There is more we can do.
If you are not yet a member of London Mutual Credit Union, you can find out how to join here.
