Today Parliament finally approved changes to legislation which will free up credit unions to reach many more members, including community groups and businesses.

A Legislative Reform Order, which makes changes to the Credit Unions Act 1979, has been approved by Parliament and new rules that enable credit unions to compete more effectively with banks and other lenders will be in place by January 2012.

The LRO came about out of a review initiated by Co-operative MP Ed Balls when a Treasury Minister in response to a request by the movement. The Labour Government tabled the order but Parliament ran out of time before the general election and the Coalition sat on the legislation for over a year despite pressure by Co-operative MPs.

Mark Lyonette, Chief Executive of credit union trade body ABCUL said: “Credit unions in Britain are delighted that legislative reforms have been agreed by Parliament which free up the sector to compete on a more level playing field. ABCUL has campaigned long and hard for these changes so we’re happy that credit unions will be able to use the new powers from the New Year.”

ABCUL point out that credit unions in Britain have, up to now, been hampered by outdated restrictions which limit who can join, what services they offer and which places they operate in.

The Order makes a number of changes, including allowing credit unions to provide services to community groups, attract investment from local businesses and extend services to new groups, including housing association tenants and employees. Credit unions will also be able to pay interest on savings, instead of a dividend, so people will more easily be able to compare rates.