Treasury backs credit unions to support financial inclusion
Credit unions will soon be able to offer a greater range of products and services to support financial inclusion.
Speaking at the Association of British Credit Unions annual conference, economic secretary John Glen MP said that the government is preparing changes in the upcoming Financial Services and Markets Bill to allow credit unions to offer a wider range of products and services.
He said that it will enable credit unions to offer hire purchase, conditional sale agreements and insurance distribution services to their members.
Glen said the government must ensure that “the door to affordable credit and financial resilience” is open to all.
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“The government will continue to stand by credit unions in your mission to provide access to affordable credit and increase financial resilience.… just as we did in the pandemic… to ensure the sector can deliver for its members now and into the future,” he said.
“Ensuring an inclusive financial system has been a top priority of mine since I first started in this role. It is a task which we much approach with renewed vigour in the face of unprecedented cost of living pressure.”
Glen said the government is committed to encouraging people of all income levels and at all stages of life to save, including through ISAs.
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“ISAs form a key part of this support, allowing individuals to save without paying tax on any interest,” he said.
“This includes – but is not limited to – the cash ISA which many credit unions offer. This support, coupled with other savings measures, mean around 95 per cent of people with savings income pay no tax on that income.”
Glen’s speech follows growing calls for reform to credit unions to support individuals amid the cost-of-living crisis, and improve financial inclusion.
An analysis from broker Freedom Finance earlier this week found that membership of credit unions has increased to a record 1.9 million in the UK.