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<p>The Government recognises the vital role of credit unions in the financial wellbeing
of their communities, providing an ethical home for their members’ savings, and affordable
loans to those who may otherwise have to resort to high-cost lenders.</p><p> </p><p>That
is why at Autumn Budget 2018, the Chancellor announced a pilot of a new prize-linked
savings scheme offered through credit unions. This operated with 15 credit unions
and has helped support the sector through increased membership, awareness and deposits.
The Chancellor also announced a new £2 million challenge fund to promote innovative
solutions from the UK’s Fintech sector to address challenges faced by social and community
lenders, including credit unions. The winners of the challenge, which included Capital
Credit Union and Serve and Protect Credit Union, were announced at Budget 2020.</p><p>
</p><p>The Government has also regularly engaged with the credit union sector, the
Financial Conduct Authority and the Prudential Regulation Authority to assess the
impact of the COVID-19 pandemic. Fair4All Finance, the independent body set up by
Government to distribute dormant assets funding to support financial inclusion, has
set up a £5 million resilience fund to support credit unions and community development
finance institutions in England during the COVID-19 pandemic.</p><p> </p><p>The Chancellor
announced at Budget 2020 that the Government intends to bring forward changes to the
Credit Unions Act to allow credit unions to offer a wider range of products and services.
This will allow credit unions to continue to grow sustainably for the future and support
them in the vital role they play in financial inclusion. The Economic Secretary recently
spoke at the Association of British Credit Unions Limited and National Credit Union
Forum annual conferences to reaffirm the Government’s commitment to legislative change
and ongoing support for the sector.</p><p> </p><p>The Government is engaging with
the credit union sector and carefully assessing options before bringing forward legislation
to ensure that we are delivering reforms which meet members’ needs and support the
development of the credit union sector.</p>
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