On 11 November the Treasury announced another reform to credit union membership rules. Members who move out of their credit union’s area will be able to refer relatives and household members to join. The government says over 50,000 people across Great Britain could benefit.
It is good news, and it adds to the package announced in March: a locality cap rising from 3 million to 10 million, and membership opened up to students, retirees and relatives outside the household. The sector welcomed both announcements, and rightly.
What neither announcement contains is a date.
When I speak to credit union CEOs and boards, the mood is the same almost everywhere. They are waiting to see what happens and when.
I understand why. But I think waiting is a mistake. I also think the sector’s trade bodies need to take accountability for getting this over the line as soon as possible, and for getting the FCA and PRA to commit to guidance that lets credit unions act the moment the law changes.
Nothing has changed yet, and it won’t for a while
Let’s be clear about where things stand. The Treasury’s commitment was to legislate “when parliamentary time allows”. No date was given.
Most of the reforms are in the Financial Services and Markets Bill. It was introduced in May, cleared the Lords in September and had its Commons second reading on 10 November, where the latest reform was announced. Committee stage and report stage are still to come, and a Bill that changes in the Commons has to go back to the Lords. The last Financial Services and Markets Act took about 11 months from introduction to Royal Assent. On that pace we are looking at early 2027.
The 10 million cap is a separate question. As far as I can tell it is not in the Bill at all and needs its own order. I have not found a date for it anywhere.
Then there is the part people forget. None of this is automatic. Each credit union has to adopt the changes in its own rules and have them registered with the FCA before a single new member can join under them.
Why waiting costs you
A rule change needs your members’ approval. If the law changes in March and your AGM was in February, you either call a special meeting or lose most of a year. The credit unions that have their amendments drafted and their meeting planned will be signing up new members while others are still booking a room.
There is also a second clock running. On 3 November the PRA and FCA published a discussion paper on the future of credit union regulation. It is explicit that credit unions planning to grow or widen their common bond should strengthen governance and risk management to match. It floats higher capital requirements for the largest firms. A wider bond is an opportunity, but it arrives with expectations attached, and those take longer to meet than a rule change.
What I would do now
- Put it on the board agenda. Decide which of the five changes matter to you. A university city, a large retired workforce, members who have moved away and a merger blocked by the cap are all different opportunities.
- Draft the rule amendments. The wording in the Bill is public. Have yours ready to go.
- Plan the member vote. Work back from your AGM date and decide now whether you will need a special meeting.
- Model the growth. More members means more deposits, more lending and more capital. Know your numbers before you open the door.
- Check your technology. Is it scalable enough? A wider bond could mean thousands more applications, so ask whether your core platform, onboarding and decisioning can take that volume without adding headcount at the same rate. Then look at your controls. Do you, and the suppliers you rely on, hold recognised security standards such as ISO 27001? Can you evidence operational resilience and oversight of your third parties? The regulators have already said these are the areas they will look at as credit unions grow.
- Respond to the discussion paper. The deadline is 5 March 2027. If you want proportionate regulation, say so with evidence.
What our trade bodies should be doing
Credit unions are represented by several bodies: All Together Money, ACE Credit Union Services, UKCreditUnions, NCUF (part of the Building Societies Association) and the Scottish League of Credit Unions, with the Swoboda Research Centre providing the research base. This is a moment for them to push in the same direction, on two things.
First, a timeline. Go to Lucy Rigby, the Economic Secretary to the Treasury, and ask her to commit to dates: a target for Royal Assent, a commencement date, and a date for the cap order. She has backed this reform in public, twice now, and deserves credit for it. Trade bodies were quoted welcoming the latest announcement, and that is fair. The next step is to ask when. “When parliamentary time allows” is not something a board can plan around. A date is. A published timeline also gives the sector something to hold government to.
Second, a clear route through the regulators. Ask the FCA and PRA to publish guidance before the law changes. Credit unions need to know what a compliant rule amendment looks like, what evidence is expected, and how long registration will take. Ideally the FCA would pre-vet draft amendments, so that applications can go in on day one and not sit in a queue.
Alongside that, model rule amendments that any credit union can adopt, and a simple public tracker showing where the Bill and the cap order stand.
A role for the Credit Union Foundation
I should declare an interest here, as I am Vice Chair of the Credit Union Foundation. I think this is an opportunity for the Foundation too. Lobbying for a date is the trade bodies’ job. Helping credit unions understand what the reform means and get ready for it is education, and that is where the Foundation can add something. Practical briefings for boards, a readiness checklist and shared examples from credit unions that have started would move more of the sector from waiting to preparing.
The first year will go to the prepared
When the law changes, hundreds of credit unions will have the same opportunity on the same day. The ones that did the work this winter will take it. Start now, and ask your trade body what date you are working to.
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