HM TREASURY News
Release (69/07) issued by The Government News Network on 21 June 2007
Economic
Secretary, Ed Balls signalled the government commitment to the
mutual sector today by publishing a consultation document that
aims to ensure the sector has the best toolset to operate in the
modern economy.
The consultation will seek to identify the legislative needs of
cooperatives and credit unions and put forward the best solutions
to allow them to operate effectively in today's and
tomorrow's business world.
Almost 50 per cent of the UK population belongs to a mutual
organisation. The sector overall has over 30 million members, and
combined total assets in excess of £400 billion.
Though membership of mutuals has grown over the last two decades,
there have been limited changes to governing legislation. In
November 2006 the Economic Secretary announced that the Government
would review this, following concerns that existing legislation is
out of date, and is in some instances restricting development and
competitiveness of the sector.
Ed Balls said:
"The challenges of the 21st century, increased expectations
from members and global competitive pressures make it imperative
that we have a legislative framework that will facilitate the
growth and expansion of the mutual sector.
"I hope that this consultation will result in the creation
of a modern legislative framework for the mutual sector in Great
Britain enabling it to stimulate innovation and competition."
The consultation will take a two-stage approach. The first stage,
published today, seeks views on the issues raised by stakeholders
about the current legal framework, addressing issues identified by
cooperative and credit union sectors as impeding development and
in need of review.
The second stage will involve consulting on firm proposals for
legislative reform, should a case for reform emerge. It will
identify the alternatives for implementation, possible advantages
and limitations and provide clear options based on results of the
first stage of the consultation.
Any changes will take into account the unique aspects of the
sector especially their mutuality and huge disparity in sizes, be
flexible enough to allow for future challenges, allow wider access
to new and existing members, provide better services and improve
competition both within and outside the sector.
Ed Balls said:
"Apart from the provision of financial and other services
sector has an important role to play in helping to deliver
government policy on financial and social inclusion and helping to
build financial capability.
"The Government's £36 million Growth Fund to support
credit unions to expand their loan service to financially excluded
people is an example of the effective working relationship which
will be further strengthened by this consultation.
"The long-term aim is to provide the mutual sector with a
modern legislative framework which will enable them to compete
even more effectively in the modern economy, and to continue to
fulfil their valuable social role."
The consultation will impact on over 8000 industrial and
provident societies and over 500 credit unions and runs for 12
weeks, closing on 12 September 2007.
NOTES TO EDITORS
1. At the Building Societies Association annual lunch on 9
November 2006 Ed Balls announced that the Treasury in partnership
with representatives of the Cooperative sector and other
stakeholders would undertake a review of the Cooperatives
legislation - the Industrial and Provident Societies and the
Credit Unions Act.
2. Cooperatives are defined by the International Cooperative
Alliance (ICA) as "an autonomous association of persons
united voluntarily to meet their common economic, social and
cultural needs and aspirations through a jointly-owned and
democratically-controlled enterprise". The majority of GB
cooperatives meet these criteria.
3. Most of the Great Britain cooperative sector are registered
under the Industrial and Provident Societies Act 1965 (IPSA 65)
although they may also register as other legal forms including as
companies (under the Companies Act), partnerships, unregistered
unincorporated associations and even as limited liability partnerships.
4. As at December 2005 there were 8,132 'live' IPSs
registered with the Financial Services Authority, with about 19
million members and total assets of nearly £120 billion. The most
significant in terms of numbers and assets are consumer and worker
cooperatives, cooperative consortiums, agricultural cooperatives
and housing cooperatives.
5. Credit Unions are financial cooperative societies offering
their members loans out of the pool of savings built up by the
members themselves. The Credit Unions Act 1979 (CU Act 79) is the
main Act of Parliament governing credit unions in Great Britain,
however they are registered under IPSA 65 and are subject to most
of its requirements.
6. There were 567 registered credit unions in Great Britain as at
30 September 2006 with just under 1/2 million members and total
assets of just under £500 million.
7. Non-media enquiries should be addressed to the Treasury
Correspondence and Enquiry Unit on 020 7270 4558, or by e-mail to public.enquiries@hm-treasury.gov.uk
8. This press release and other Treasury publications and
information are available on the Treasury website at http://www.hm-treasury.gov.uk.
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