Due to newly-introduced regulatory changes, credit unions in the UK are set to expand and compete with instant cash loan providers and high street lenders alike, with some industry experts predicting that the quick loans provided by credit unions striking a balance between the two.
Prior to the enactment of these new rules, individuals looking for traditional lending in the UK were in a bind, especially if their credit rating was less than stellar. Many have availed themselves of no credit check short term loans to get the much-needed funds instead of resorting to expensive unauthorised overdrafts from their banks, as overdraft charges can sometimes easily outstrip the cost of an instant cash loan repayment.
Credit unions were always seen as an alternative to traditional lenders, but rules governing these not-for-profit co-operatives have barred them from opening their doors to larger customer bases. Now, they are no longer bound by regulations limiting their member base to a geographical locale or pulling their members from common organisations.
Credit unions were also seen as poor choices for Brits looking to grow their savings pots in the past because members only paid yearly dividends on any balances. However, this limitation has also been lifted, and credit unions can now compete with high street banks on an even playing field.
A spokesperson from the Association of British Credit Unions Limited, Matt Bland, remarked that the newly revised rules governing credit unions should allow them to expand both their product ranges and membership quite swiftly. Credit unions being able to pay interest instead of only a dividend will be key in this expansion, added Mr Bland, as this will allow them to offer mortgages, ISAs, and other related products.