Credit Unions

Gregory Campbell Excerpts

Wednesday 16th July 2025 Westminster Hall

[Katrina Murray]

My hon. Friend is reading ahead in my speech about some of the things that the Government could do to extend and support the sector.

Before joining the NHS credit union, I was a regular visitor to my local community credit union—staffed entirely by volunteers—until I moved house and moved out of the common bond. For nearly 30 years, until it sadly folded in 2017, it was a source of savings and small loans for a community that was mostly cash based. It inhabited the premises that the Royal Bank of Scotland vacated when it closed the branch. Often, small community credit unions remain in places where commercial banks have pulled out. That closure reflects a wider challenge: some credit unions have scaled up and professionalised; others have struggled, in particular those volunteer-led credit unions serving working class and rural communities.

In that unique community-based role, credit unions can offer a vital partnership to support underserved or excluded communities, whether they are excluded by poverty or by geography. All too often, we have heard Members raise the swathes of local bank branch closures in their constituencies. Mine has been particularly affected, as commercial lending evolves and the local footprint of lenders diminishes. Credit unions have to be on both sides of that bridge: at the forefront of innovation but still able to provide traditional, accessible services in the community.

It is vital that we have an alternative to expensive credit, and credit unions have a strong role to play. When a household is financially vulnerable, one fault in their car or one failed fridge or freezer can be the difference between staying afloat and facing a downward spiral of increasingly costly credit. The resilience of having £1,000 in savings is the firewall that stops that spiral.

We have often discussed the positive impact of no-interest loans. Credit unions can play a vital part in the design and delivery of a no-interest loan offer, providing an alternative to financially vulnerable households who cannot rely on commercial lending. Pilots by Fair4All Finance show notable success when it comes to meeting emergency costs for white goods, such as a broken-down fridge, cooker or other essential household appliance. Over 70% of customers in the pilot were in the rented sector, either social housing or renting privately.

As the UK Government’s own materials acknowledge, credit unions offer basic savings and loan services, but increasingly they do much more. Large credit unions such as the Glasgow credit union, which grew out of the Glasgow city council credit union, offer mortgages. They offer financial inclusion, especially for people who may not feel served or welcome in the commercial banking sector. They are not for profit, member-owned and designed to be run with communities, not over them.

Despite all its strengths, the credit union sector faces significant headwinds. I will start with regulation. In recent conversations with the NHS credit union, a number of serious concerns were raised that are shared across the sector. Most notably, the Financial Ombudsman Service has begun applying the commercial lending standards known as the CONC—consumer credit sourcebook—rules to credit unions, despite the fact that they are exempt from those by law. The use of “good industry practice” by the ombudsman without transparency or a legislative basis has left credit unions exposed to a growing number of frivolous or opportunistic claims, often driven by predatory claims management companies.

When credit unions have challenged that with the Financial Conduct Authority, they have been referred back to the ombudsman, creating a regulatory echo chamber that shuts down scrutiny and ignores the fact that the CONC was never intended for mutuals. A superficial search of decisions of the ombudsman using “credit union” as a search term shows that it is the same credit union names that come up. For each case where a decision is listed, there are many more going through the process, with many cases being reopened, and it is an overwhelming burden for these small organisations to process them.

This matters, because it introduces risk and cost into organisations that exist to serve, not to profit. It creates uncertainty, stifles growth and undermines the Government’s ambition to support the co-operative and mutual sector. I urge the Minister to engage with those concerns and ensure regulatory clarity that supports, rather than stifles, credit unions.

Regulation is not the only challenge. Despite some growth, credit union penetration in Great Britain remains low. Just 4% of adults hold a credit union savings account, compared with 25% in Northern Ireland and 73% in the Republic of Ireland. While membership is rising, the number of credit unions continues to fall. To thrive, credit unions need to modernise. Many want to expand their digital offer, working with fintech providers to offer budgeting apps and even current accounts, but innovation costs money. Small unions—especially those still run by volunteers—lack the capacity to upgrade systems or train staff.

I welcome the Financial Services and Markets Act 2023, which gave unions more freedom to offer services such as hire purchase and insurance distribution, but more must follow. I support the proposals to allow investment in credit union service organisations, which could help unions to share IT, compliance and admin systems.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Lady on securing this debate; many of us have been involved with credit unions for a number of years. She has spoken about the diversification of credit unions. Last night, the Chancellor said she is trying to encourage more people into market-based savings products. Does the hon. Lady agree that credit unions could embrace that concept, provided that they have the capacity and willingness to do it? That would allow everyone involved with credit unions to benefit over the longer term.

[Katrina Murray]

The Chancellor’s speech last night was very timely. Credit unions are particularly well placed to benefit thoroughly from that if they have support, and I hope the Minister will expand on that. We need to update the law in Northern Ireland so that the strength of the credit union movement there is able to match progress that has been made in GB.

The perception that credit unions are the poor man’s bank is a harmful stereotype that limits the sector’s growth. Credit unions are for everyone and should be seen as an act not only of charity but of good sense. They are member-owned, community-rooted and democratic. This is finance as it should be.

Credit unions are more than just lenders; they are educators, community builders and the agents of financial justice. But they are at risk from burdensome regulation, under-investment and a lack of understanding at the highest level of Government.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Mr Twigg. I commend and thank my Gaelic cousin, the hon. Member for Cumbernauld and Kirkintilloch (Katrina Murray), for setting the scene so very well. It is also good to see the Minister in his place. He is certainly becoming a regular in Westminster Hall—he is here almost as much as me.

[Mr Gregory Campbell]

Not quite!

[Jim Shannon]

That was meant as a compliment, by the way. I look forward to the Minister’s contribution. The shadow Minister, the hon. Member for Wyre Forest (Mark Garnier), brings a wealth of knowledge to the debate from his previous employment. I know that the debate will be greatly enhanced by the contributions of all.

I have long been an advocate of credit unions, and I have been thinking about how long I have been involved with them. The credit union in Greyabbey was run by the Orange lodge, which was the instigator. It made its hall available and managed the credit union under the auspices of credit unions elsewhere as the governing body.

I became involved to support credit unions and to start an account for my three boys. Only last week, I realised that moneys in that account had been gathering for some time and had been sitting in the transfer, because the account was transferred from Greyabbey to Newtownards credit union. My three boys have a bonus coming, which I will let them know about one of these days. I hope they will not spend it on wasteful living, but whatever they do, they do.

The credit union instilled in my boys and in me from an early age the value of saving and of ensuring that the saver can afford to pay back loans. That is the great thing about the credit union; we can put money in and borrow money out, but it is controlled in a way that means someone can live and borrow at a rate they can repay. That is a lesson that I learned from my mum and dad—of course, as we all learn from our mums and dads—and that has stayed with me these many years.

It is said that every pound is a prisoner to a Scots woman or man, but I think it is equally a prisoner to some of us in Northern Ireland; we are no different. As the hon. Member for Cumbernauld and Kirkintilloch said, there has been substantial growth of credit unions in Northern Ireland, particularly in membership and assets. Membership has doubled in the past decade, with 34% of the population now saving with a credit union, which is a massive figure.