HM Treasury has launched a call for evidence to explore potential reforms to the credit union common bond framework. These reforms aim to modernise the legislative framework and support sustainable growth in the sector. This call for evidence could bring significant changes to how credit unions operate and define their membership, making it an essential development for anyone involved in the sector.
At the heart of every credit union is a common bond: the shared connection between its members.
Under current legislation, four types of common bonds are recognised:
- Occupation: Members following a particular profession or trade.
- Employer: Members working for a specific employer.
- Association: Members belonging to a bona fide organisation, such as a trade union.
- Locality: Members living or working in a specific area.
These bonds define who can join a credit union and are critical to how they operate.
What is the call for evidence about?
HM Treasury’s Call for Evidence aims to determine whether the current common bond framework remains fit for purpose in the 21st century. By inviting feedback, the government hopes to gather insights into how the framework could be modernised to support sustainable growth while preserving the community-focused nature of credit unions.
The consultation includes 15 open-ended questions exploring:
Definitions of Common Bonds: Should the definitions of occupation, employer, association, or locality bonds be updated?
Membership Caps: Should the current cap of 3 million members for locality bonds be revised?
Household and Corporate Memberships: Should the rules for family members and corporate entities joining a credit union be updated?
Wider Impacts: How might changes influence competition, the creation of new credit unions, and transfers of engagement (mergers)?
These questions address key areas of change while inviting input on broader regulatory considerations.
Who will this affect and what happens next?
This call for evidence is particularly relevant for credit unions, their members, and anyone involved in the savings and loans market. It offers a chance to shape the legislative framework governing credit union membership and operations.
The call for evidence will run for 16 weeks, closing at 11:45 PM on 6 March 2025. After reviewing responses, the government will publish a summary and outline its next steps, which may include a consultation on specific proposals
Feedback is welcome from all stakeholders, whether individuals or organisations, who are interested in the future of credit unions.
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