The Association of British Credit Unions (Abcul) and Building Societies Association (BSA) have called on MPs to back reforms to support the growth of the sectors, at a session of the Treasury Select Committee.
Abcul CEO Matt Bland and BSA CEO Sarah Harrison went before MPs last week to advocate for credit unions and building societies as agents to deliver economic and social value, and to explore ways to support the sustainable growth of the sectors.
The event came as the government continues to seek ways to deliver on its pledge to double the size of the co-operative and mutuals sector.
In his evidence to the select committee, Bland emphasised “the distinctive contribution credit unions make as member-owned, community-based financial institutions, particularly in reaching people underserved by mainstream financial services”.
He also highlighted the sector’s “strong track record in promoting financial resilience, supporting household stability and providing affordable credit and savings products rooted in local communities”.
Abcul is urging a number of measures to unlock “inclusive growth” for credit unions, with targeted reform, investment and collaboration across the financial services landscape. Central to this, Bland told MPs, is the government’s financial inclusion strategy, which recognises credit unions as a key delivery partner in expanding access to fair and affordable financial services.
He welcomed the government’s £30m investment commitment through Fair4All Finance as a significant step forward, noting that long-term, strategic funding will help credit unions modernise infrastructure, improve digital capability and scale their impact.
Bland also highlighted proposed reforms to the common bond framework, which would allow credit unions to reach more people while maintaining their local and member-focused ethos.
On payroll savings, Abcul’s key ask is for the Treasury to build on commitments made in the financial inclusion strategy and legislate to create an enabling framework for employers who wish to offer opt-out savings to their employees. This would allow them to do so with regulatory certainty.
The work of Nest Insight provides the roadmap to how this is done, says Abcul. In the short term, clarification of National Minimum Wage guidance from HMRC regarding payroll savings would be a useful step.
Related: UK regulators promise reforms to help grow financial mutuals sector
Looking ahead, Bland referenced the Credit Union Growth Plan, launched by Abcul alongside the BSA and other sector apexes at a separate event at Westminster last week.
Abcul says the plan, developed collaboratively across the sector, sets out a clear roadmap for expanding membership, strengthening financial sustainability and increasing the contribution of credit unions to the UK economy.
Bland stressed that proportionate regulation, supportive supervision from the regulators, and continued engagement with policymakers “will be critical to turning ambition into delivery”.
For the BSA, Harrison called for “changes to legislation, capital regulation, routes to access to capital, and just a more powerful and consistent seat for building societies and credit unions at the table with government alongside shareholder-based banks, particularly when it comes to financial inclusion, competitiveness and growth”.
She said there “all sort of different ways” to measure a doubling of the sector.
“You could pin it on gross value added (GVA)” she added, “and if you look back over the last decade in the building society sector, there has already been quite a substantial doubling of the asset base of the sector. Whether it is credible and achievable to see a doubling again over the next 10 years remains to be seen; it certainly ought to be an ambition.
“But that would risk missing the point because in many respects this is not just about numbers of members, customers, numbers of building societies or, indeed, numbers of branches, it is about the impact on customers in terms of access to lending, access to competitive rates for savings, and actually community benefit which is deep and consistent across the building society sector.”
Commenting on the hearing, Bland said: “Abcul welcomed the opportunity to ensure the voice of credit unions was clearly heard by MPs as they consider the future of mutuals in the UK financial system. The evidence session underlined the sector’s readiness to play a larger role in delivering inclusive growth, provided the right policy, regulatory and investment environment is in place.”
