13 May 2005

Changes to Credit Union rules

Commerce Minister Peter Hodgson today announced proposed changes to the legislation governing friendly societies and credit unions.

A first set of changes comprise:

- Allowing credit unions to decide their own common bond
- Allowing charities and incorporated societies to join credit unions
- Allowing credit unions to determine their own minimum deposit levels
- Remove the requirement to specify charges in credit unions’ rules, and
- Allowing credit unions to extend new services to their members.

It is proposed that these changes, that have already been the subject of consultation with the sector, be made by way of legislation scheduled to be introduced later this year.

Further changes, which will be included in the review of non-bank financial products and providers also announced today, are likely to be in the areas of:

- Amendments to current restrictions to give credit unions more flexibility to borrow and to invest surplus funds, and allow them to hold land
- Allowing credit unions to raise capital by issuing securities to members
- Conferring legal status on credit unions, and
- Allowing credit unions to convert to limited liability companies.

“Credit unions and Friendly Societies play an important role in providing financial services to New Zealanders who do not have access to mainstream banking providers,” says Pete Hodgson.

“The proposed changes, and those to be developed through the review, should give these institutions greater flexibility to grow and bolster their value to consumers and the wider market."

ENDS

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